A R E T A I L R E A L E S T A T E C O M P A N Y I N V E S T O R P R E S E N T A T I O N S E P T E M B E R 2 0 1 6
GGP OVERVIEW S&P 500 REAL ESTATE INVESTMENT TRUST (a) NYSE Ticker GGP Headquarters Chicago Employees 1,700 Retail Properties 128 States 40 Total Retail GLA 121 million Enterprise Value $46.0 billion NATICK MALL, NATICK, MA THE WOODLANDS MALL, HOUSTON, TX 2 a) As of June 30, 2016.
GGP MISSION & VALUES Own and operate Best-in-Class retail properties that provide an outstanding environment and experience for our Communities, Retailers, Employees, Consumers and Shareholders. RIDGEDALE CENTER, MINNETONKA, MN OPERATING HIGHLIGHTS (a) Nordstrom Grand Opening – October 2015 Tenant Sales Growth (b) 2.8% Occupancy Cost 13.9% Leased 96.1% Lease Spreads (c) 13.7% H – Humility SHOPS AT MERRICK PARK, CORAL GABLES, FL A – Attitude D – Do The Right Thing T – Together O – Own It a) All Same Store operating metrics as of June 30, 2016. 3 b) All tenant sales less anchors on a rolling 12 months ended June 30, 2016, excluding Christiana Mall. Tenant sales increased 0.8% including Christiana Mall. c) Lease spreads are suite-to-suite and represent trailing 12 month commencements.
GGP OWNS IRREPLACEABLE RETAIL REAL ESTATE IN THE U.S. GGP owns 100 of the top 500 • regional shopping centers in Regional the U.S. Shopping Centers GGP outpaces U.S. retail • growth nearly 2-to- 1 with “A” Urban Retail centers driving the majority of Assets growth Regional Shopping Center Sales and NOI Percentage GAFO Sales Growth 2010 to 2015; by Rank (a) Excluding Department Stores (d) Top Retail Properties Sales PSF (b) % of Company NOI (c) Sales Volume Growth Top 10 $792 23% Total United States 13% (From U.S. Census) Top 30 $727 48% GGP Portfolio 23% Top 50 $677 67% (Inline, Comp, <10k) Top 100 $598 96% Total Retail Properties $583 100% 78 Class A Retail Properties $686 78% a) Retail properties ranked by 2016 YTD NOI ending June 30, 2016. b) Sales per square foot for trailing 12 months ended June 30, 2016 for comparable tenants occupying space less than 10,000 square feet. c) For 2016 YTD ending June 30, 2016. 4 d) Source: U.S. Census Nov. 2015 and GGP. GAFO stands for General Merchandise, Apparel and Accessories, Furniture and Other Sales.
SUSTAINABILITY Committed to being an environmentally responsible business Concentrated on investments that increase environmental performance Awarded the 2015 GreenStar and recognized as the North American leader in the Retail – Large Cap Sector by GRESB in 2014 (a) 2 0 1 5 I M P A C T A T A G L A N C E GGP will rank among the Top 10 Reduced our carbon footprint by Diverted over 54,300 tons of waste U.S. companies by solar capacity from landfills; enough waste to fill 23,200 metric tons of carbon once projects are completed, over 4,500 garbage trucks. dioxide equivalents, which is the according to the 2015 SEIA equivalent of taking 4,700 cars off Ranking. U.S. roads. Reduced our water consumption Completed lighting and HVAC Since 2011, GGP has reduced by 64 million gallons ; enough water upgrades with an expected electricity consumption by 215.8 to fill almost 100 Olympic-size million kilowatt hours ; enough savings of 44.5 million kilowatt swimming pools. hours annually; equal to remo- electricity to power all the homes in Coral Gables, FL for one year. ving 4,200 homes from the electrical grid. 5 a) GRESB stands for Global Real Estate Sustainability Benchmark.
INVESTING IN THE CUSTOMER EXPERIENCE: PARKING GGP invests in solving for customer pain points GGP customers reported parking as the • biggest pain point during the shopping experience An upgraded parking availability • notification system and spot identifiers reduce time customers spend parking, and enable more time spent shopping A recently released upgrade to GGP’s • app includes a new pilot feature now at Ridgedale Center, Alderwood Mall, Stonestown Galleria, and Oakbrook Center, which allows customers to glean how busy certain blocks of parking are at any given time 6
INVESTING IN THE CUSTOMER EXPERIENCE: WAYFINDING GGP is putting resources towards preparing for the future of retail Goal is to have customers start a product search on Google, find that product at a GGP retail property, and digitally guide them to an open parking space at the property, and then to the store to find the desired product USING DIGITAL TO AID IN BRICK AND MORTAR SALES 7
CHANGING THE VOCABULARY: RETAIL REAL ESTATE As lines continue to blur between where certain retail tenants would traditionally choose to reside, there is less segmentation by property type and the industry can now be defined simply as Retail Real Estate Services Restaurants Entertainment RETAIL Sources of REAL Demand ESTATE Grocery High quality locations with high quality customer experiences will win 8
THE U.S. IS OVER RETAILED U.S. has the highest GLA per capita by far among all developed countries U.S. also leads the world in retail sales per capita, but the margin is likely not wide enough to support the excessive GLA RETAIL REAL ESTATE GLA AND SALES PER CAPITA 30 $14,000 $11,687 $12,000 25 24 RETAIL SALES PER CAPITA $10,000 RETAIL SF PER CAPITA 20 $8,560 $8,014 $8,056 $8,000 $7,167 15 $6,000 10 $4,000 10 $2,238 5 $2,000 5 4 2 2 0 $0 U.S. Australia U.K. France Germany China Retail SF per Capita Retail Sales per Capita 9 Source: ICSC, Knight Frank Research
3.9 SF PER CAPITA OF U.S. RETAIL REAL ESTATE IS HIGH QUALITY TOTAL U.S. RETAIL REAL ESTATE GLA GLA % of Total SF Per Capita (in millions) High Quality GLA High Quality 1 Regional Shopping Center GLA 495 1.6 40% High Quality 2 Open-Air Center GLA 732 2.3 60% Total High Quality Retail Real Estate 1,227 3.9 100% LOOKING AT U.S. RETAIL REAL ESTATE GLA BY QUALITY RATHER THAN TYPE By Type By Quality vs. 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 Open-Air Centers Retail Real Estate 6.3 billion sf High Quality 19.7 sf per capita Open-Air Centers Regional 6.4 billion sf Shopping Centers 20.2 sf per capita GGP owns 8.2% of all High Quality Retail Real Estate 1” High Quality” has been defined as a regional shopping center rated B+ or better by Green Street Advisors. 2 “ High Quality “ has been defined as a Trade Area Power score of 75 -100 for strip centers, as rated by Green Street Advisors. The 11% of high quality Strip Centers was extrapolated to project 10 High Quality GLA for the entire 6.4B sf classified by ICSC as Open-Air Centers.
BRICK AND MORTAR REMAINS AT THE CENTER OF RETAILING Physical stores account for 90% of all retail activity 1 ― Catalog sales at its peak in 1995 was 10% of all retail sales ― Today catalog sales and online sales combined are 10% of all retail sales Omni-channel shoppers spend twice as much as individuals who just shop in one channel ― The Multiplier Effect: customers who browse both channels shop more frequently Source: Kurt Salmon Review 2013 / Wharton Report 11 1 In 2014, Pure Play E-Commerce accounted for just 3.3% of all retail sales based on the 2014 U.S. Census Retail Trade Sales Annual Report, and Omni-channel retailer e- commerce sales from ICSC report “Deconstructing the Census Bureau’s Retail Trade E - Commerce Figures” in Retail Property Insights Vol. 23, No. 1, 2016
CURATION IS KEY TO PERFORMANCE RESTAURANTS PERSONAL CARE HOME FURNISHINGS ENTERTAINMENT APPAREL BIG BOX ELECTRONICS GROCERY 12
TRAFFIC IS DRIVEN BY INLINE TENANTS Inline tenants with strong brands and unique Over the past decade, department store products drive consumer spending and performance has lagged that of inline shops continuous traffic within the GGP portfolio ESTIMATED TOTAL VISITS On a rolling 12 month basis as of June 2016, TO GGP CENTERS (a) anchor sales are down 1.9% while total inline Traffic (in millions) – Bar Graph Sales Per Square Foot – Line Graph sales are up 2.8% (b) DEPARTMENT STORES vs. GGP INLINE SHOPS (c) 2005-2015 Total Sales in GGP Portfolio 2005-2015 % Change Total Non-Anchor GAFO Sales, Comp +33% Basis Sales-Reporting Anchor/Department -10% Stores Year-Over-Year Traffic Growth 2012 2013 2014 2015 Total Industry Sales 2005-2015 % 4% 3% - 2% Change GAFO Sales excluding Department +30% Stores Lines form at Oakbrook Department Stores excluding Leased -23% Center in Oak Brook, IL Departments for the Tesla Model 3 release a) Source: GGP b) All tenant sales less anchors on a rolling 12 months ended June 30, 2016, excluding Christiana Mall. Tenant sales increased 0.8% including Christiana Mall. 13 c) Sources: U.S. Census Bureau, FactSet, and GGP.
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