NEXT IN RETAIL: REIMAGINING THE FUTURE OF THE INDUSTRY

• ••

1 INTRODUCTION 0 3

CHAPTER ONE: THE WINDS OF CHANGE 04

CHAPTER TWO: PHYSICAL RETAIL IS THE MONEY MAKER 05

CHAPTER THREE: QUALITY COUNTS 11

CHAPTER FOUR: TIME TO PIVOT 15

CHAPTER FIVE: LOOKING TO THE FUTURE 19

ABOUT US

TABLE OF CONTENTS OF TABLE CONTENTS OF TABLE CONTENTS OF TABLE CONTENTS OF TABLE 23 INTRODUCTION

Even before the coronavirus This paper aims to explore it’s up to all players within began its global sweep three key points that have the industry to take action. in early 2020, leaving a emerged as critical to the By implementing One reshaped retail landscape future of physical retail. Channel retail strategies in its wake, there was a in high-quality locations, perception that • First, the entire retail retailers and retail real brick-and-mortar was industry has been estate owners can work passé, and that it was transitioning to a One together to reimagine retail e-commerce’s turn to Channel2 strategy for some and pave the way for our dominate the marketplace. time, with the coronavirus collective success. Although online retail sales only accelerating this trend. grew $6.7B during the U.S. government-mandated • Second, physical stores Brookfield Properties shut down, this was a poor continue to be valuable counterbalance to the profit centers, rewarding defines One Channel $44.3B loss experienced online retailers that invest retail as providing by physical retail.1 And, in a physical presence with the consumer with a while it is true that 2020 an overall incremental sales consistent, relevant, has seen many retailer lift of 26% in a single market and individualized bankruptcies and shopping with appropriate consumer center closures, the simple demand, also known as the experience across fact remains: physical retail “halo effect."3 digital and physical is alive and well. In fact, assets to deliver it continues to provide • Third, high-quality retail seamless engagement the bedrock foundation real estate is poised to win with a brand. that bolsters online sales long-term, as it continues success, rather than the to serve the needs of other way around. businesses, consumers, 1 U.S. Census Bureau: Total Retail Sales excluding Auto, Gas, and Food Service 2020 and communities. 2 Brookfield Properties defines One Channel retail as providing the consumer a consistent, relevant, and indi- With these points in mind, vidualized experience across digital and physical assets to deliver seamless engagement with the brand. 3 “The Halo Effect –How Bricks Impact Clicks” ICSC, 2018 3 THE WINDS The coronavirus brought Forward-thinking industry significant and swift change leaders have also been OF CHANGE to the retail ecosystem, moving away from strictly but brick-and-mortar’s evaluating performance in evolution began long before terms of sales channel for the pandemic arrived on a while now. In May 2019, U.S. shores. Creating a the CEO of Louis Vuitton, seamless path to purchase Michael Burke, put it clearly, for customers across all sales “[Channel] is irrelevant channels, both online and for me. It’s almost as if in-store, is a challenge the someone asked me what’s industry has faced for years. the percentage of sales using Retail companies, perceiving Visa versus MasterCard. changes in customer attitude I’m not in the business of prior to 2020, pivoted to a being a payment provider. One Channel retail strategy I’m in the business of selling focused on better experiences and objects… orchestrating all facets of I view my clientele as the customer experience. 100% online and 100% brick-and-mortar.”4

The future of retail is now. For those savvy enough to feel the early winds of change and move toward implementing One Channel strategies prior to the pandemic, everything they foresaw and planned for is merely actualizing at an accelerated pace. As old ways blow away, early adopters of this approach can confidently reimagine and shape what is to come.

CHAPTER ONE CHAPTER ONE CHAPTER ONE

4 Wall Street Journal 2019 https://www.wsj.com/ articles/louis-vuitton-michael-burke-nicolas-virgil-su- CHAPTER ONE preme-11557405576

CHAPTER ONE4 CHAPTER ONE CHAPTER TWO

PHYSICAL RETAIL IS THE MONEY MAKER

55 Prior to Q1 2020, physical when a retailer closes a store retail sales had been growing in a market with balanced 2% per year and accounted consumer demand, it loses for almost 80% of all retail not only sales from that brick- sales, resulting in an overall and-mortar location, but also retail growth rate of 3.4% about 10% of digital sales in per year since 2016.5 A the same market. 2018 study published by the International Council The importance of physical of Shopping Centers (ICSC) stores is becoming more demonstrated the impact and more apparent to online Physical stores are work that opening a physical store retailers. As of January 2020, horses that benefit brands had on previous online-only even Amazon is continuing in profitable ways—serving retailers. They named this the expansion into physical as the foundation that impact the “halo effect.”3 retail as evidenced by drives the retail engine. Simply put, the halo effect is the accelerated rollout Not only are physical the incremental e-commerce of its specialty stores like stores money makers, sales lift that occurs upon a Amazon 4-star, in addition their storefronts provide store opening in a market to expanding their grocery, competitive advantages such where there is appropriate operations, and distribution as customer acquisition, consumer demand. The hubs.6 To compete with brand engagement, and findings in this study can be Walmart and Target, awareness building, as well applied to demonstrate that which use their stores to as operational benefits when opening a physical store can drive transactions and they function as distribution increase total sales in an fulfillment, Amazon is facilities, pickup locations, illustrative market by +234%. seeking to build a network and returns centers. Inversely, according to ICSC, in close proximity to its target market.

Brand awareness builder Brand engagement for or “billboard” that drives customers to touch, feel, sales across channels and try on product

CUSTOMER BRAND ACQUISITION BUILDING

Reduces shipping costs TOTAL RETURNS POINT OF AND leads to incremental In-store revenue CENTER STORE SALE in-store sales VALUE

PICK-UP DISTRIBUTION LOCATION CENTER

Reduces cost of last-mile of Reduces cost of last-mile of distribution AND leads to distribution incremental in-store sales

5 Euromonitor 2016-2019 6 Chain Store Age 2020 https://chainstoreage.com/ama- zon-double-down-expansion-amazon-4-star-stores 6 What is the One Channel single market sales impact of opening a physical store?

+234%

$312,000 >$4M $2.5M

$1.2M

01. 02. 03. 04. An average If a retailer opens Due to the Adding the $1.2 market without a physical store physical store, million digital a physical store in a market digital sales in sales + $2.5 may deliver where there the market grow million physical $1.2 million in is appropriate +26%, or about sales + $312K digital sales. consumer $312K, thanks to halo effect demand, they the halo effect. sales = total sales could realize the of +$4 million.7 average inline By adding a physical mall sales per store, this brand store: $2.5 million. increases sales by +234%.

At this point, because the merchant has a digital and a physical presence, the halo effect kicks in. This relates squarely to the increased awareness and customer acquisition discussed earlier.

7 “The Halo Effect – How Bricks Impact Clicks” ICSC, 2018. Analysis across 804 store openings / closures 13 weeks pre-vs. 13 weeks post-opening. Notes on Halo Model: *Average Sales per store is 2017 Brookfield Properties data from a selection of Top 16 retailers: L Brands, Foot Locker, Gap, Ascena, Abercrombie & Fitch, Express, American Eagle, H&M, Williams-Sonoma, Urban Outfitters, Caleres, DSW, Finish Line, J.Crew, Lulu- lemon Athletica, Deckers Outdoor. Average e-commerce Sales $ from same 16 brands public 2017 eMarketer data, averaged across 929 Census CBSA markets. 7 Physical stores serve as Using Google Search literal “billboards” that drive engagement by Indices as a proxy for providing customers with opportunities to touch and feel products in real- consumer awareness, we time. This can be especially important for digital-native see that shopper interest or emerging brands that might otherwise exist in in online-only brands customers’ consciousness as fleeting images of cool lifestyle such as Warby Parker products in easily forgotten social media ads. Put simply, retail stores are the most and Peloton spikes in effective customer-acquisition tools where digital-native parallel with physical- brands can invest. 8 store openings. 8 Google Trends

GOOGLE SEARCH INDEX BY BRAND AND STORE COUNT

~ PELOTON . WARBY PARKER

GOOGLE SEARCH INDEX TREND STORE COUNT GOOGLE SEARCH INDEX TREND STORE COUNT

100 100 100 100

90 90 90 90

80 80 80 80

70 70 70 70

60 60 60 60

50 50 50 50

40 40 40 40

30 30 30 30

20 20 20 20

10 10 10 10

0 0 0 0 1/1/2014 1/1/2015 1/1/2016 1/1/2017 1/1/2018 1/1/2019 1/1/2014 1/1/2015 1/1/2016 1/1/2017 1/1/2018 1/1/2019

Google Trend Peloton Store Count Google Trend Warby Parker Store Count

- Google Trend -vs. Store Count - Google Trend -vs. Store Count

8 H1 2020 U.S. RETAIL SALES VOLUME BY CHANNEL

TOTAL U.S. RETAIL SALES $464B $462B $477B $438B $448B

DIGITAL SALES % 15% 15% $383B 17% OF TOTAL 17% 19% 21%

JAN FEB MAR APR MAY JUN

PANDEMIC PHYSICAL FORCED STORE STORES CLOSURES REOPEN -NON-STORE SALES -IN-STORE SALES

At the National Retail moment they visit the store, Further, the scale of physical Federation’s (NRF) Big they may decide to buy in-store sales versus digital Show in May 2020, former because they visited that e-commerce sales became Crate & Barrel CEO Neela physical point of purchase.9 abundantly clear—nearly all Montgomery elaborated non-essential retailers lost further on the importance of Lastly, the financial impact total sales, despite in many the physical store, remarking of physical stores has never cases doubling or tripling that by driving customer been clearer than during their digital e-commerce awareness of a digital brand, the coronavirus shutdown. sales. Digital growth (+$6.7B) and by allowing consumers In April 2020, with most could not come close to to touch and feel previously brick-and-mortar retail offsetting the $44.3B lost online-only products, physical closed around the world, in physical retail stores due stores play a vital role in online retail sites saw an to government-mandated the sales funnel that digital 88% increase in traffic.10 closures. retailers simply cannot Yet, that growth came match. The value of a physical with constrained margins retail store should be derived stemming from exorbitant 9 Retail Dive 2020 https://www.retaildive.com/news/the- from its marketing value. And online-fulfillment and comeback-of-the-brick-and-mortar-store/570290 10 Bazaarvoice 2020 https://www.bazaarvoice.com/blog/ while customers may not customer acquisition costs. the-impact-of-covid-19-on-e-commerce-by-category-up- actually buy an item the dated-weekly

9 MYTH BUSTER Digital Outranks Physical

While there is always much excitement and talk about the growth and potential of e-commerce retail in the media, it is a myth that e-commerce is more profitable than physical retail. In fact, online retail faces its own unique set of challenges, most significantly the high cost of customer acquisition. As of the end of 2018, digital cost-per-click advertising rates exploded 255% over a four- year period.11

Further, increased spend and focus on digital advertising by retailers has not paid off—in-store conversion rates still exceed online sales by a magnitude of six, accounting for nearly 80% of all retail sales.12 The Business of Fashion’s Doug Stephens clarified further by saying that while digital advertising has proliferated, it has lost its edge. “Digital advertising has become marginalized. We are swimming in a sea of media and communication from brands. Stores are the new channel for retail. Stores are an incredibly powerful means of bringing people together.”9

11 The Cost of Pay-Per Click Advertising Trends & Analysis: Hochman Consultants July 2018 12 Cognizant “The Road to 2025 Retail Reimagined” July 2017 10 CHAPTER THREE

QUALITY COUNTS

11 The final piece of under-performing retail real Data as of April 2020 successfully reimagining estate. The U.S. has 24 suggests that lower-rated retail is understanding the square feet of gross leasable malls, as measured by importance of operating area (GLA, the amount Green Street Advisors physical retail stores in high- of space in a commercial (GSA), comprise 22% of quality retail centers, where property that is available to total U.S. GLA but only brands and customers alike lease) per capita, 50% account for 11% of retail can reap the rewards. High- more than the next-largest sales.13 Conversely, A-rated quality shopping centers national market among properties account for 58% occupied by the most developed countries of overall sales although they desirable brands and located (Canada). However, U.S. represent only 36% of GSA- proximate to a concentration retail sales were only a rated mall GLA.14 of engaged shoppers serve third larger (33.34%) than as a strong platform for Canada’s. Basically, the customer acquisition, U.S. has double the square overall sales growth, and footage yet only a third more 13 U.S. mall real estate is quality-ranked A++ to D. High- order fulfillment. of the sales. Undeniably, quality is defined as A++ - B-; low-quality properties are defined as C-D grade. there is too much retail 14 Green Street Advisors (GSA) April 2020, Gross Leasable Area (GLA) based on shop square footage. GSA, a It is true that the U.S. is space for the current respected and independent third-party firm, assesses institutionally owned retail centers and scores them, simply oversaturated with consumer demand. accordingly, giving each a grade ranging from A++ to D.

SALES & GLA BY PROPERTY QUALITY GRADE

58%

36% 37% 30% 22% 11%

GRADE A B C

■ SHARE OF GLA ■ SHARE OF SALES

12 The outsized sales AVERAGE SHOPPER DRAW BY PROPERTY TYPE performance of high- Shoppers Reporting to Have Visited a Retail Location in the Past 3 Months quality retail centers is not Top 10 U.S. Markets, Excluding Manhattan surprising given their ability to draw large numbers of customers. Data shows that strong regional +41% shopping centers deliver a higher count of unique 650K shoppers—40% more

unique shoppers during 460K a three-month period— on average than urban retail districts excluding Manhattan.15 Additionally, mall shoppers come primed and ready to buy rather than browse, meaning AVERAGE URBAN AVERAGE A-MALL DRAW brands with a shopping DISTRICT DRAW mall presence not only garner greater exposure for customer acquisition but also benefit from higher sales volume due to consumers’ mission-based shopping trips.

15 Scarborough. Notes: Top 10 DMAs include Atlanta, Boston, Chicago, Dallas, Houston, Los Angeles, Philadelphia, San Francisco, and Washington DC; NYC excluded given its incomparable urban density; Draw refers to adult shopping behavior (18+). 13 Although we continue NATIONAL RETAILERS' PHYSICAL STORE CLOSINGS to see media coverage January–July 2020 Store Closing Announcements asserting that physical retail is in distress, nearly 57% of store closures 6,558 year-to-date have been 100% attributed to brands that ASCENA were financially challenged 90% 17% prior to the pandemic.16 These recent bankruptcies 80% of unhealthy brands should PIER 1 60% of 2020 retail closures not be conflated with the 14% through the end of July were >-- due to retail bankruptcies. health of physical retail 70% Operators in a healthier cash store operations that have GNC position are not closing doors. proven to be an accelerator 11% 60% for businesses that are committed to a One Channel OTHER BANKRUPT 50% strategy and located in high- RETAILERS quality retail centers. 15%

40%

30%

NON-BANKRUPT 20% RETAILERS 42%

10%

0%

H1 2020

16 Coresight Research 2020 Store Tracker, YTD measured as Jan 1- July 31, 2020 14 CHAPTER FOUR

TIME TO PIVOT

15 To the mutual delight Additionally, according According to an August of retailers and their to a recent study, 40% of 2020 Mall Shopper customers, physical retail consumers stated they are Sentiment Study, 55% of U.S. stores began to reopen currently avoiding making consumers report they miss in May 2020. Some key online purchases because of shopping at malls, a lot.19 retailers’ sales quickly the hassle of returns.18 And relative to many other rebounded 50% to above public venues and activities, 100% of last year’s levels. As we all try to better visiting shopping centers is These sales were the result understand how consumers one of the few top activities of higher conversion rates are reacting to this people feel comfortable and larger baskets, with next normal, research doing under pandemic shoppers exhibiting pent-up consistently shows that conditions. demand during the people are eager to return 17 Q1 Earnings Calls 18 Brookfield Properties Consumer Insights Mall Shopper government-mandated to in-store shopping. Sentiment National Online Survey (August 10-17, 2020; 17 N=1,484 American mall-shoppers aged 18-75) shut down. 19 Mall Shopper Sentiment CI Study, August 2020

16 17 Physical retailers and high- implementing social- Finally, high-quality shopping quality retail real estate distancing guidelines, centers have become owners quickly adapted to instituting face mask more important than ever the new landscape of the requirements, and launching to the local communities pandemic, swiftly offering new technologies that allow they serve. Centers have consumers a new standard for virtual line queuing at adapted to the new needs baseline for safety as well retail venues. of their communities by as new fulfillment options, drawing customers in for including Buy Online socially distanced gathering Pickup In-Store (BOPIS) FIT MATCH ® opportunities, providing and Curbside Pickup, both drive-up meal service to of which have doubled in We also see emerging those in need, hosting usage since the pandemic retailers successfully essential blood drives and began. When correctly reimagining what retail looks COVID-19 testing centers, executed, these new like today, pivoting their and even screening drive- fulfillment services have business models to better in movies and concerts proven extremely popular meet consumer needs in their spacious parking with shoppers, who now during unprecedented times. lots. Shopping centers seem reluctant to lose For example, emerging are leveraging their open them: 62% plan to continue brand Fit:Match is expanding spaces, like central lawns or increase their use even rapidly, recently opening and common-area space, when the pandemic has at both Oakbrook Center to allow for safe shopping passed.20 These services in suburban Chicago and and gathering for their will play a critical role Baybrook Mall just outside of communities. during the holiday season, Houston. Fit:Match provides when e-commerce sales technology to consolidate 20 McKinsey & Co., “COVID Retail Response and Action Planning #6”, 5/22/20 will increase, and shipping the sizing and measurement 21 Women’s Wear Daily 2020 https://wwd.com/busi- ness-news/business-features/fit-match-opens-studio- capacity and order of clothing from hundreds brookfield-properties-oakbrook-center-1203706557/ fulfillment will be of brands, enabling a constrained and costly due contactless fitting room to excessive demand. experience for customers—a must in today’s socially As for safety standards, distanced environment the facility and operations when most fitting rooms are teams at high-quality currently closed to the public.21 shopping centers are working hard to address new measures for the health of consumers, employees, and tenants at their properties while partnering closely with government officials. Property owners embraced transparency by communicating improvements that were made via enhanced onsite signage, enforcing highly visible sanitation and cleanliness practices, 18 CHAPTER FIVE

LOOKING TO THE FUTURE

19 When it comes to PELOTON ° reimagining retail in 2020 ¢ and beyond, physical Est. Peloton Revenue and storefronts continue to Physical Stores by Year play a critical role. Healthy retailers continue their plans to open stores in 2020, with over 3,000 new stores $750M $719M having already opened year-to-date, +5% more than $500M in the same period 22 last year. $349M 73

$250M $184M $171M ------42 ------24 17 $0M 2016 2017 2018 2019 --•-- # OF STORES -ANNUAL REVENUE (M) Consider the case of Peloton, whose performance across their many store openings over the past four years clearly shows the opportunity available to retailers looking to grow their business.23 When asked about the importance of his retail fleet of stores recently, Peloton CEO, John Foley stated, “I am more excited about our retail stores than I was 90 days ago. We are selling tons of Peloton products today without our stores being open. So, a lot of investors are saying ‘Hey, we don’t need our stores.’ I’m thinking the opposite. I am 22 Coresight Research 2020 and 2019 Store Trackers, YTD really excited about comparing Jan 1- July 31, 2020 vs. Jan 1- July 31, 2019 23 Peloton IPO Filings with U.S. Securities and Exchange the opportunity that is Commission, 2019 https://www.sec.gov/Archives/edgar/ data/1639825/000119312519230923/d738839ds1.htm; going to present itself with True Ventures, “What’s Working: Peloton’s Retail Showroom Strategy”, 2018 https://trueventures.com/blog/peloton-re- some retailers struggling tail-showroom-strategy/; Retail Insider, “Peloton Enters Can- ada with retail Expansion”, 2018: https://www.retail-insider. and Peloton being able to com/retail-insider/2018/10/peloton-enters-canada-with-re- tail-expansion; Marketwatch, “Peloton IPO: 5 things to pick up more premium retail know about the interactive exercise-machine company”, 2019 https://www.marketwatch.com/story/peloton-ipo-five- locations. We’re going to be things-to-know-about-the-interactive-exercise-machine- company-2019-08-28?ns=prod/accounts-mw; and Vox, investing and making those “The Peloton bike company plans to unveil its next product: 24 A treadmill”, 2017 special locations.” 24 Time 2020 https://time.com/5839552/peloton-ceo-john- foley/ 20 The ongoing strategy of in retail bankruptcies access and flexibility owners of high-quality retail in 2020 will enable mall to obtain the products centers remains relevant owners to further accelerate and services they need today as they continue this strategy, bringing an anytime, anywhere. Experts to focus on evolving their exciting assortment of new indicate these changes properties into hubs of brands and services to their will permanently influence daily life and commerce. retail centers and to the consumer behavior, These owners have long communities that they serve. requiring owners of high- been focused on enhancing quality retail real estate to their tenant curation Changing consumer demand partner with retailers to strategies to move beyond will also bring alternative optimize the operations of special-occasion shopping approaches to the traditional their physical locations so and towards creating path to purchase as they can become centralized destinations that serve expectations continue to hubs focused on discovery, other consumer needs, evolve. The impact of the fulfillment, and returns. including fitness, education, coronavirus has raised dining, medical, and consumers’ expectations, entertainment. The increase and they are demanding

SHOPPING

DISCOVERY & COMMUNITY RECREATION GATHERING SHOPPING CENTER AS THE CENTER SHOPPING ) AS A HUB OF DESTINATION DAILY LIFE

FULFILLMENT FOOD & & LOGISTICS ENTERTAINMENT

YESTERDAY TOMORROW

OWNER / DEVELOPER OWNER / DEVELOPER AS LANDLORD AS "LIFESTYLE ARCHITECT"

21 IN CONCLUSION IN CONCLUSION We already see retailers like Whole Foods Market trying new ways to strengthen IN CONCLUSION relationships with their customers, testing a dark IN CONCLUSION store concept in Brooklyn, New York, where only online orders are fulfilled.25 Similarly, IN CONCLUSION in lululemon athletica's Q2 2020 earnings call CEO Calvin McDonald said, “We continue to believe physical stores are and always will be an extremely as runway shows.27 important part of our ecosystem. From a sales Lastly, the coronavirus has standpoint, our stores are highlighted the importance highly productive, and they of social interaction and the enable so much more than need for people to leave simply the purchase of their homes for meaningful proof the industry. apparel by our guests. Our in-person experiences. Retail centers have always stores are our local hubs As a species we crave been lifestyle hubs, and now and communities across community—and retailers more than ever all parts of the globe, gathering spots will continue to evolve to the industry must focus on for our ambassadors and fulfill this human need by building the marketplaces our connection to local providing spaces for people of the future—the new studios. They facilitate to connect, explore, and neighborhood for the e-commerce transactions engage, while also meeting consumer. The first Persian via our ship-from-store their everyday shopping bazaar brought people and buy online, pick up in- needs. Additionally, retail and commerce together in store capabilities, and are a centers have a responsibility ancient times, and though portal to bring new guests to create a positive impact the concept has evolved into our brand.”26 Another on the environment and to throughout the ages, its basic industry visionary, Off- be a voice for social issues purpose remains the same— White CEO, fashion design that are important to the bringing people together: to and globally recognized communities they serve. gather, explore, and discover. artist Virgil Abloh, recently The mutual benefit of a announced that his newest community and a shopping Off-White store will be a center working together will flexible flagship retail location drive improvements for both 25 Supermarket News 2020 https://www.supermarketnews. that will enable logistics and com/online-retail/whole-foods-opens-online-only-dark- stakeholders that will sustain store-brooklyn fulfillment, as well as space to 26 CNBC 2020 https://www.cnbc.com/2020/09/08/lulu- them, ensure long-term lemon-lulu-reports-q2-2020-earnings-beat.html host large-scale events such 27 Dezeen 2020 https://www.dezeen.com/2020/08/12/off- relevance, and help future- white-miami-design-district-flagship-virgil-abloh-amo/

22 ABOUT US

BROOKFIELD PROPERTIES

We’re at the forefront of We have transformed our creating a new era of retail. centers into destinations Our cutting-edge approach for the next generation of is reimagining the expected consumers. Our gathering shopper experience through places are paradigms innovation, strategic of modern luxury and thinking, leasing curation, accessibility—providing community partnerships, visitors with high-profile advanced sustainability retailers and eclectic initiatives, and unparalleled culinary, cultural concepts in activations. Brookfield inspiring settings. Properties owns 19% of all institutionally graded Brookfield Properties is a high-quality real estate in fully-integrated, global real the United States, including estate services company that regional shopping centers provides industry-leading like Ala Moana Center in portfolio management and Honolulu, which was named development capabilities the “#1 Most Valuable Mall across the real estate in America” in 2018.28 investment strategies of Brookfield Asset Management. Our expansive portfolio comprises more than 170 locations across 43 states and represents over 150 million square feet of retail space—ranking us among the largest retail real estate companies in the U.S.

28 Business Insider 2018 https://www.businessinsider. com/americas-most-valu- able-mall-ala-moana-photos- details-2018-1 nextinretail.com

DISCLOSURES

This commentary and the information contained herein are for educational and informational purposes only and do not consti tute, and should not be construed as, an offer to sell, or a solicitation of an offer to buy, any securities or related financial instru ments. This commentary discusses broad market, industry or sector trends, or other general economic or market conditions and is being provided on a confidential basis. It is not intended to provide an overview of the terms applicable to any products sponsored by Brookfield Properties and Brookfield Asset Management Inc. and its affiliates (together, "Brookfield").

This commentary contains information and views as of the date indicated and such information and views are subject to change without notice. Certain of the information provided herein has been prepared based on Brookfield's internal research and certain information is based on various assumptions made by Brookfield, any of which may prove to be incorrect. Brookfield may have not verified (and disclaims any obligation to verify) the accuracy or completeness of any information included herein including information that has been provided by third parties and you cannot rely on Brookfield as having verified such information. The information provided herein reflects Brookfield's perspectives and beliefs.

Investors should consult with their advisors prior to making an investment in any fund or program, including a Brookfield-spon sored fund or program.

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