The View From The Center v3 June 10, 2020 Sharks or Dolphins?

Is it safe to go back in the waters?

2 Seems To Think So…

Strip Center REIT Stock Performance Since May 15, 2020 Brixmor, Kimco, Site Centers, Federal, Urban Edge, Regency, Retail Properties of America

3 Moving In The Right Direction

AmCap’s Shopping Center Heatmap, March 25 AmCap’s Shopping Center Heatmap, June 10

Center A Center B Center C Center D Center E Center F Center G Center H Center I Center J Center K Center L Center M Center N Center O Center P Center Q Center R Center S Center T Center U Center V Center A Center B Center C Center D Center E Center F Center G Center H Center J Center K Center L Center M Center N Center O Center P Center Q Center I Center R Center S Center T Center U Center V [Formerly Amelia Anthony's Ladies Accuquest Hearing AFC Urgent Care 3-S Liquors #29 Advance Auto Parts A&A Music Center Accurate Personnel Applebee's #67007 Altitude Running, LLC AFC Urgent Care #17 24 Hour Fitness #324 A+ Mail Room A1 Copy Mailbox Happy Feet Best Cleaners 24 Hour Fitness #352 24 Hour Fitness #326 Annie’s Salon AT&T Mobility Paris] Apparel #010 Center (CONFIDENTIAL)

BBVA Compass CO18- Bloomfield Dental Alt-Med Medical & America's Best Apple-A-Day Nutrition Arthur Murray Dance Ace Hardware #36412- Buffalo Financial King Soopers #33 All Nails ABC Liquor Store Anthropologie Autozone 4897-01-01 Blue Cross Blue Shield At the Beach #51 Bank of America A Mobile Locksmith Ace Cash Express #49 IHOP Applebee's Chopt Colorado Krav Maga 01 Care Physical Therapy Contacts Clinic Studio 01 Group

Akira Japanese Bealls Outlet/ Home Academy Kids Dental, AT&T (Connect Buffalo Service Credit Dave’s Shoe Repair America's Best Wings Bluemercury Bloomfield Opticians Closets AT&T Mobility Brooklyn Pizza ATI Physical Therapy Bank of America America's Best Wings Longhorn Steakhouse Chipotle Mexican Grill Creative Nail & Spa At The Beach arc Thrift Stores Cricket Wireless #555 Restaurant Centric #3306 Vision, Orthodontics Wireless) Union

Chipotle Mexican Grill Baskin-Robbins Aurora Modern AT&T (Connect [Formerly Carousel Dojo Source Dollar Tree Ashburn Village Inn Pizza Bonita Smoke Shop Boost Mobile Citizen's Bank Buffalo Wild Wings Dollar Tree Ace Hardware ATI Physical Therapy Michaels Corner Bakery Five Below Beauti Nails & Spa Dollar Tree #2704 #05-0032 #33238 Dentistry (#522) Wireless) Academy]

Brinton Lake Nails & Bonita Smoke Shop CPR of Fort Collins, Advance America Gigantic Cleaners H&R Block Bank of America Boston Market Enterprise Rent-A-Car Great Clips Dotty's Big Daddy's Pizza Aurora's Hair Design Norridge Tobacco Dale Douglas, DDS Buffalo Wild Wings Frostings Centre Salon & Spa Cost Cutters #62211 Fortune City Catholic Charities Spa Office LLC #812-R

Burlington Coat Crystal's Wine & Istanbul Café and Elegant Eyebrow Spectrum (Time JewelFire Diamonds Maiden Choice Liquor Chau's Café Cardinal Camera China Wok Five Below Edward Jones #38808 Chi Reflexology Bright Stars Daycare Beautiful Nails Pearle Vision Gamestop Inc. #3819 Chick-fil-A (#1924) Growlers To Go Chipotle #05-0007 King Soopers #31 Factory Liquor Bakery Threading Warner Call Center)

King Soopers Five Guys Burgers & Buckingham Easy Dental Health of Spectrum (Time Rite Aid Choong Man Chicken Chico's Crunch Fitness Copaco Liquors Eheart Design Center King Soopers #35 Fannie May Del Taco Boost Mobile Petco #1980 Hair Cuttery #2397 Cricket H&R Block #44819 Emerald Dental Modern Nails Marketplace #36 Fries Clean Laundry Colorado Warner Standalone)

Cheektowaga Chipotle Mexican Grill Chopathi India Ideal Image Laser Hair Einstein's Bagels O'Reilly Auto Parts Modest Nail Salon Kevin Clary Eye Associates Color Me Mine Dr. Damon DDS CVS GameStop FedEx Office #1601 Optical Masters Frankie's Pizza Dr. Phone Fix Pizza Hut -Osco #3478 Dickey's Barbecue Pit Frijoles Colorado Chamber of #05-0023 Kitchen Removal Center #1797 #2712 Commerce

JP Morgan Chase Dick's Sporting Goods Inchinos Bamboo General Nutrition Noodles & Co #118 SunTrust Bank Cynthia's Salon & Spa CVS SuperCuts Dollar Tree Mattress Firm Hair & Co. Pho OK Great Clips Fashion Nail & Spa D’Lux Spa & Nails Crisp & Juicy Putting Edge Elvis Cinemas T-Mobile COLA004100ConServe #84259 (#728) Garden Center #5358

Friendly Frankie's Hallmark Gold Crown Pink Nails Beauty Jackson Hewitt Tax Orangetheory Fitness Total Laundry Center Domino's Pizza #8399 Eddie Bauer EbLens Miracle Ear Super Star Nails & Spa Firehouse Subs Dollar Tree #04818 Dollar Tree #1365 Rainbow Nails Kidsnips, LLC Family Medicine i Rite iPhone Repair European Wax Tom & Jake’s Barbers County of Erie Liquor #739 Salon Service #19901

Stores Hand & Stone Freddy's Frozen Petco #2428 Inc. EMP 180 Weight Loss GNC Jean Nicole Hair Salon Firestone Moe's Southwest Grill The UPS Store #1237 Quest Chirporactic Great Clips Fantastic Sam’s Dona Bessy Shoe Carnival #249 L. Lovely Nails Ltd Jimmy Johns FedEx Office #1851 Jimmy John's #0807 Valley Inn Restaurant Empire State College Massage Custard

Express Care of Harmony Smiles Ross Dress For Less Hungry Howie's Fred Loya Insurance Longhorn Steakhouse Wadsworth Liquor & First Choice Qdoba Mexican Eats Wells Fargo Bank, NA J. Crew #0606 Jet's Pizza Gamestop #3876 New Asian House GameStop Sports Clips LensCrafters #00011 GameStop #6658 Great Clips King Soopers #40 Ashburn Dentistry #595 #2129 Flavored Crust Pizza Agency #5309 Wine Evaluations

Gino's Pizza & Ranch Sally Beauty Supply Jackson Hewitt Tax Starbucks #5293CO Eye Level Education J.Jill PMB #249 JP Morgan Chase New Magic Nails Home Depot #1512 H&R Block #7019 Jenny Craig #4402 Staples Marshall's #559 GNC #9117 Mattress Warehouse H&R Block McDonald's KeyBank House #10391 Service

Jackson Hewitt Tax SuperCuts #90986 Floor & Design Kindercare #303071 Komoon Tai Sushi Goodwill Oak Street Health Homegoods, Inc. #536 King Soopers #130 King Soopers #30 KC Beauty Mart Super China Buffet New Balance International Optique Norman’s Liquors M&T Bank Service

The Honey Baked Ham Men's Wearhouse Palmercare Friends Barber Shop Loft Massage Luxe IHOP PETCO Jimmy John's Kings Gas Kumon Little Caesar's Jimmy John's PETCO Kim's Wig Botik National Fuel Gas Company #4611 Chiropractic

Harris Teeter #242 lululemon #1408 Metro Diner Jumbo Buffet Sally Beauty King Soopers #73 Papa Murphy's Ali Grill Marshalls #10-0224 Verizon Wireless Northpoint Hair StudioKey Bank Sweet Frog Yogurt Massage Envy Pho Hau Queen City Café

M&H Discount Mattress Firm HomeGoods Pearle Vision Nail Boutique and Spa Kim's Gift Shop Super Stop & Shop LV Spa & Nails Pet Supplies Plus Micky's Restaurant Vitamin Shoppe Kohl's (#1241) The Joint Chiropractic Pizza Hut #4853 South Ranch Liquors #003042

PF Chang's China Naples Community Music and Arts Center Qdoba Mexican Eats Montgomery Village NorthShore University [Formerly Special Jersey Mike's Subs Lim's Health Food Super Stop & Shop Fuel New Age Barbershop Walgreens Lane Bryant (#4750) Trader Joes Peak Physical Therapy Portanova Jeweler Bistro #9949 Hospital #3905 #2522 Beer & Wine Health System Funds Conservation]

Master Lee's Martial NewSouth Window U.S. Armed Forces Rainbow Apparel Massage Envy Spa Pier 1 Imports #1056 Lowe's OrangeTheory Fitness Ross #2253 MVP Barber Office Depot #2418 Ulta #404 PetCo #2414 Qdoba Mexican Eats Telcove Arts Solutions Career Center #440 (#365)

Navy Federal Credit Ross Dress For Less Time Warner Cable Moby Dick Pottery Barn #538 Old Time Pottery McDonald's Papa Murphy's Smashburger #1325 Sprint Maurice's (#2079) Vitamin Shoppe Pho 63 Schwan Cleaners Union #1464 (Pad #3)

Pearle Vision, Inc. Subway Restaurant Menchie's Frozen Rocky Mountain Ballet of Off Broadway Shoes Pure Bread Deli Pak-n-Ship Mobily (AT&T) Tan Your Hide Salons by JC TCF Bank #7035 #6538 #2929 Yogurt Academy America - IRS

Peppers Jamaican [Formerly Windsor United States of Party Depot Ruby's Diner Petar's Restaurant Petsmart #0251 TCBY Petco #5808 Tuesday Morning Milan Laser Sparks Nails & Spa The UPS Store Bakery Dental Care] America - VA

Qdoba Mexican Eats Pet Supplies Plus Soft Surroundings Pet People Perfect Nails & Hair T-Mobile #135 Wingstop #0159 Pho & Grill WynBurg Café Modern Hair & Design Subway #5243 Venture Martial Arts US Renal Care #002041-1

Pro American The Fresh Fish YRC Enterprise [Formerly Rubino's] Soma Intimates Planet Fitness Rita's Italian Ice Veteran's Liquor Sally Beauty #728 Xfinity Nail Studio (#553) Insurance Company Services

Sprint Spectrum Wells Fargo Bank Shell Talbot's #1449 Rainbow Apparel Vitalant U Smile Dental Studio Noodles & CO (#141) #111558 #140016

The Fresh Market Starbuck's Sally Beauty #2447 Sprint #7271 Starbucks #5449 Jack In The Box #8142 Vivi Bubble Tea Office Depot (#3272) Whole Foods #10207 #106

[Formerly St. Francis Credit Union of Papa John's Pizza Sweet Frog The Lash Lounge Subway #61195 Stretch Zone Wendy's #4190 Hospital] Colorado (#4258)

T-Mobile West LLC Tiffany's Nails Spa The Ski Bum Synovus Bank Stop & Shop #651 Jimmy John's Petco (#2403) #0324

Stop & Shop Fueling Tuesday Morning Qdoba Mexican Eats Tobacco Hut Victoria's Secret Verizon Goodyear Station #FTCO 253 (#2537)

Village Square White Dog Café Webster Bank Walgreen's #6844 Ross Dress For Less Cleaners

Weight Watchers Sally Beauty Supply Wendy's #11012 Wild Birds Unlimited Westfield Bank #41500 (#10633)

Wells Fargo Bank Zazu Gifts Williams-Sonoma Solutek Systems #144631

Z-Ultimate Defence WSFS Bank Sports Clips #CO 118 Studios

Sprouts Farmers Market (#305)

Starbucks (#5294)

Target (T-1413)

open The Joint

open T-Mobile (CO AU 002790-553) closed Ulta Beauty (#1027) closed Uncle Maddio's Wells Fargo (BE#106004) Curbside/takeout Xfinity (Comcast Curbside/takeout #3350) vacant

4 AmCap Tenant Base Snapshot, As of 6/1/201

National vs Inline Open vs Closed Paid/Not Paid For May 1% 4.4% 2.7%

31.4% 22% 42.4% 45% 55% 58% 19% 64.2% 54.5%

Open Nationals Inline National Inline Closed Curbside Only/Bank Vacant Paid Not Paid Partial

1 Defined by store count 5 Who paid their rent?

INDUSTRY APRIL COLLECTIONS PER GREEN STREET % PAID BY TYPE, AMCAP TENANTS1 100% 100% 90% 90% 80% 80% 70% 70% 60% 60%

50% 50%

40% % PAID 40%

30% 30%

20% 20%

10% 10%

0% 0%

April May

Green Street Advisors, Strip Center Sector Update, June 1, 2020

1 BY STORE COUNT 6 The Paradox of Size Shopping centers rely upon a mix of large national tenants and a sprinkling of smaller local store concepts. Historically, the national tenants have credit, mostly good, while the smaller ones may have less, but are personally invested in their business.

Over the years, shopping centers have evolved to include fewer local concepts and more national vendors. Think how a shopping center looks the same in Athens, or Athens, .

Covid will have a lasting impact on tenant mix. The weak will fold, whether a Pier One or the local pizza guy who’s pizza was just not that good. At this time, over 2 million businesses are at risk of going out of business immediately1. By number, there will be a lot more small stores going under than big ones; healthy, big retailers will get larger, and the landscape will continue to shift to national concepts from local. This is true throughout American business, as reflected in the accompanying chart. Small businesses continue to disappear, and with that, power and economics continues to accrue to the larger players.

National Collections by Number of As we saw during Covidtime, the larger players don’t always play nice. Many of them chose not to pay rent, or chose to argue for greatly revised terms, even some who were open for business. What the industry ended up 100% Tenants with looks similar to AmCap’s experience, as seen to the left. 80% April May This was clearly a case of “we are big so we can get what we want.” As the landscape evolves coming out of 60% the downturn, landlords will continue to face the conundrum of whether to rent to a smaller, conceivably riskier 40% 64.2 local operator, or to the safer but more powerful national tenant. Will future behavior be more like what we 58% 20% % saw during Covidtime, when those tenants feel at liberty to exercise their might?

0% This reinforces the need for a focus on the fundamentals: strong location, strong market, strong grocer as your Total Paid anchor, strong operator. Those shopping centers will be sought out by nationals and locals alike. Weaker locations will struggle to fill vacancy, and those landlords will have little bargaining power.

1 America’s Recovery Fund Coalition, June 2020 7 The Center of the Future: Essential plus E-commerce Proof

Essential* E-commerce Proof Center Grocery Grocery Medical Medical of the Banks Banks Pets Fitness Office/Communications Restaurants Future Hardware/Auto Beauty Restaurants Home Improvement 24/7/365

“Consumer behavior is changing, and COVID-19 is forcing retail companies to innovate not just for today but for the customers of tomorrow, as well.” Rachel Elias Wein, “Four Predictions for Post-Pandemic Retail Success,” April 3, 2020.

8 *Every state defined essential differently, so in some locations this list may vary. The Pipeline: Something Needs To Give Seller expectations have not reset Debt/Cap spreads have moved some for value-add, but not much

Debt/Cap Spread Debt/Cap Spread Core Low High Value Add Low High

Pre-COVID 2.7 bps 2.6 bps Pre-COVID 2.6 bps 2.8 bps

Current Estimate 2.5 bps 2.5 bps Current Estimate 2.7 bps 3.0 bps Based on AmCap estimates comparing low cost debt to low cap rate, higher cost debt to higher cap rate.

Distressed opportunities will slowly emerge. There will be forbearance for zombies, whether companies or landlords, similar to what was seen in Japan and Europe over prior decades. Expect patient lenders through 2020. Forbearance plays a role, but its not the only story. Tired landlords seeking liquidity may be the precursor to any wave of distressed.

Investors need to be creative and selective. They cannot just be capital providers - everyone has capital. Provide a solution. The deals are there, they just need to be pried loose, like candy from the hand of a child.

9 The Answers Here’s how we think the near future just might look:

1) We’ll be ready for COVID-19, v2.0, and no one will care as much. America has a strange capacity for inuring itself to tragedy.

2) At-home grocery delivery fades away along with COVID-19 - hopefully by September.

3) Meal delivery gets more expensive, enjoying a fading value proposition as diners venture forth into the world.

4) Click-and-collect blossoms across retail. Cruise the parking lot, fill your trunk with groceries, pick up some wine and a pillow to replace the one the dog ate, all without leaving your car.

5) You will have a candlelit dinner at a white-clothed table, in that same parking lot.

6) Gyms will be open and busy as everyone continues to fulfill New Year’s resolutions, but with clean hands and reservations. No showers before returning to the home office.

7) There will be casualties in retail – but seriously, it will be like cleaning the basement the first week of Covidtime. Out with the old and in with the new. New concepts and new uses will thrive, and the media will talk about new things instead of re-hashing Retail Armageddon stories.

8) Last-mile fulfillment takes up residence at your local power center and/or shopping center. Watch that empty junior anchor or movie theater transform.

9) Running to get a Jersey Mike’s #7 (Mike’s Way) for lunch at your local shopping center will be a happy (and needed) respite from your new home office.

10) The shopping center is not going away. You’ve probably been to one already!

10 Contact Us We are happy to share our thoughts and perspectives in more detail.

Stephen Chase Managing Director [email protected] 203-327-2001

11