Investor Presentation May 2016 GGP Overview S&P 500 Real Estate - - PowerPoint PPT Presentation

Investor Presentation May 2016

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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 $46.1 billion

The Woodlands Mall, Houston, Texas Natick Mall, Natick, MA

a) As of March 31, 2016.

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Own and operate Best-in-Class retail properties that provide an

• utstanding environment and experience for our Communities, Retailers,

Employees, Consumers and Shareholders.

GGP Mission & Values

Operating Highlights(a) Tenant Sales Growth(b) 4.0% Occupancy Cost 13.7% Leased 95.9% Lease Spreads(c) 12.0%

Ridgedale Center, Minnetonka, MN Nordstrom Grand Opening – October 2015 Shops at Merrick Park, Coral Gables, FL

H – Humility A – Attitude D – Do The Right Thing T – Together O – Own It

a) All Same Store operating metrics as of March 31, 2016. b) All tenant sales less anchors on a rolling 12 months ended March 31, 2016. Inline sales growth is 2.1% including Christiana Mall, which has had unusual changes in sales productivity. c) Lease spreads are suite-to-suite and represent 2016 commencements.

Irreplaceable Retail Properties in the U.S.

• GGP owns 100 of the top 500 malls in the U.S.

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Malls Sales and NOI Percentage by Rank(a) Top Retail Properties 2016 Sales PSF(b) % of Company NOI(c) Top 10 $799 23% Top 30 $688 48% Top 50 $681 66% Top 100 $597 95% Total Retail Properties $584 100% 78 Class A Retail Properties $690 77%

a) Retail properties ranked by 2016 YTD NOI b) Sales per square foot for trailing 12 months ended March 31, 2016 for comparable tenants occupying space less than 10,000 square feet. c) For 2016 YTD ending March 31, 2016.

GGP Outpaces U.S. Retail Growth Nearly 2-To-1 With “A” Centers Driving The Majority Of Growth

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GAFO Sales Growth; Total Market vs GGP

2010 to 2015; Excluding Department Stores

GGP Portfolio Productivity

Sales Volume Total United States (From U.S. Census) 13% GGP Portfolio (Inline, Comp, <10k) 23%

Source: U.S. Census Nov. 2015 and GGP. GAFO stands for General Merchandise, Apparel and Accessories, Furniture and Other Sales.

Traffic Across The GGP Portfolio Is Steady, With YoY Increases Across All Classes Of Assets

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Estimated Total Visits to GGP Centers

Year-Over-Year Traffic Growth 2012 2013 2014 2015 4% 3%

• 2%

Traffic (in millions) – Bar Graph Sales Per Square Foot – Line Graph

Source: GGP.

Redevelopment of Department Store Boxes

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• Since 2011, 82 of 83 vacant department stores have been redeveloped for a

total cost of $1.4 billion generating an 11% annual return

• 17 department stores - Nordstrom (3), Von Maur (3), Macy’s (2), Boscov’s (2),

Dillard’s (2), Belk, Lord & Taylor, Bloomingdale’s, Carson’s and Bon Ton

• 10 entertainment venues - theaters (3), trampoline parks (2), Dave & Buster’s (3)

and Round One (2)

• 11 sporting goods stores – Dick’s Sporting Goods / Field & Stream (5), Sports

Authority (4) and Scheels (2)

• 5 fast fashion retailers - Forever 21 (3) and H&M (2)
• 4 restaurants – Perry’s, Yard House, Old Town Pour House and Harry Caray’s
• 4 grocery stores - Sprouts, Fresh Market, Wegmans and Total Wine
• 3 fitness centers – 24 Hour Fitness, City Sports and Family Fitness
• 3 DSW
• 3 Container Stores
• 2 Pirch
• 185,000 square feet of inline space including, but not limited to, Apple, Nike,

Lululemon, Tommy Bahama and Aritzia

• 20 other uses including, but not limited to, Nordstrom Rack, Crate& Barrel, Petco,

Ulta and HH Gregg

DEPARTMENT STORES vs. GGP INLINE SHOPS

2005-2015

• Over the past decade, department store performance has lagged that of inline shops

within the GGP portfolio.

• On a rolling 12 month basis as of March 2016, Anchor sales are down 1.9% while total inline

sales are up 4.0%.

Department Store Performance

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Total Sales in GGP Portfolio 2005-2015 % Change Total Non-Anchor GAFO Sales, Comp Basis +33% Sales-Reporting Anchor/Department Stores

• 10%

Total Industry Sales 2005-2015 % Change GAFO Sales excluding Department Stores +30% Department Stores excluding Leased Departments

• 23%

(a)

a) Inline sales growth is 2.1% including Christiana Mall, which has had unusual changes in sales productivity. Sources & Notes: U.S. Census Bureau, FactSet, GGP Intel, GGP Strategy & Analytics. Years reflect calendar years. GGP figures reflect properties consistently open from 2005 to 2015.

Sources: GGP Strategy & Analytics, Nielsen Local, 2014-2015. 400,489 respondents.

PROPENSITY TO SHOP AT LEAST ONCE EVERY THREE MONTHS, 100 = AVG SHOPPER

116 107 92 83 20 40 60 80 100 120 140 Millennials 18-34 Gen Xers 35-49 Baby Boomers 50-65 Silents Over 65

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Regional Mall Visitation by Generation

• Millennials have the highest propensity of any generation to visit regional malls on a

regular basis.

Macy’s

775

Dillard’s

270

Hudson’s Bay Company (US)

90

Neiman Marcus

40

Nordstrom

120

Department Store Consolidation Timeline

SELECTED RETAILERS

Associated Dry Goods Allied Federated May Carter Hawley Hale Mercantile Dillard's Lord & Taylor Jordan Marsh A & S Famous Barr Broadway Bacon's JW Robinston Bon Marché Lazarus Kaufmann's Emporium Castner Knott Goldwater's Donaldson's Filene's Hecht's Thalheimers Gayfers Acquired Stix Baer Fuller Block Bloomingdale's G Fox Wanamakers Glass Block Lowensteins Denver Dry Goods Joske's Burdine's Meier & Frank Neiman Marcus JB White Diamonds Robinsons FL Maas Brothers Rich's Strawbridge's Bergdorf Goodman Jones Store Joske's LS Ayres Miller & Rhoad's Foley's ZCMI Joslins Higbee's Horne's Pomeroy's Sanger Harris Lion DH Holmes Caldor Stern's Bullocks Maison Blanche Ivey's I Magnin Acquired by Federated McAlpins Acquires Associated in 1995 in 1986 Neiman Group spun 1986 Sold to May Dept. 1986 Acquired by Campeau to General Cinema Aquired Mercantile Acquired Allied in Sold to Dillard's 1998 1988 1998 Acquires Dayton Hudson Becomes Federated 1988 Acquired by Federated Marshall Field's Becomes Macy's, Inc. 2005 in 2004 2007 Operate as Dillard's Acquired Macy's in 1994 Becomes Macy's, Inc. Becomes Macy's, Inc. 2007 Sold to Federated 2007 2005 Becomes Macy's, Inc. 2007 Becomes Macy's, Inc. 2007

APPROXIMATE CURRENT STORE COUNTS

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At the peak of department store nameplates, there were 56 different department store brands

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Oakbrook Center

Conversions Former Store Sears Bloomingdale's Neiman Marcus (Lower Level) Productivity Store Category 2010 2015 Change Inline Retail $668 $911 +36% Anchors $233 $271 +17% New Stores TBD Dining/Entertainment Pirch, Aritzia, Boss, lululemon, Tommy Bahama Perry's Steakhouse, Old Town Pour House

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Natick Mall

Conversions Former Store JCPenney Sears Productivity Store Category 2010 2015 Change Inline Retail $552 $671 +22% Anchors $181 $201 +11% New Stores Wegmans TBD Entertainment

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Cumberland Mall

Conversions Former Store JCPenney Davison's Productivity Store Category 2010 2015 Change Inline Retail $379 $610 +61% Anchors $275 $306 +12% New Stores Costco Buffalo Wild Wings, Cheesecake Factory, Chico's, H&M, Maggiano's, P.F. Chang's, Soma, Stoney River, Ted's Montana Grill

Omni-Channel Generates Higher Sales

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Source: ICSC

eCommerce Retailers are Opening Brick and Mortar Stores

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Electronics Apple Microsoft Dyson Sportswear Athleta Fabletics Beauty Birchbox The Honest Company Food/Candy Vosges Haut-Chocolat Try the World Children’s Apparel Monica & Andy Furniture/Home Essentia Accessories Warby Parker Just Fab Shinola Classic Specs Adore Me The Tie Bar Raden Jewelry Baublebar Blue Nile Other Amazon Apparel Trunk Club ModCloth NastyGal Rent the Runway Combatant Gentlemen Duluth Trading Co. Refinery29 1701 Bespoke Weddington Way Frank & Oak Untuckit Chubbies Everlane Indochino Bonobos

Restaurants Entertainment Sources of Mall Demand Services Grocery

• Consumers still desire a sensory, tactile

experience, particularly when shopping for goods for which comfort is a paramount point of consideration.

• The conversion rate of browsers to

buyers is multiples higher in a physical store environment versus a digital environment – averaging around 20% (and as high as 60% depending on store type) compared to less than 5% online – resulting in significantly lower customer acquisition costs and SG&A per unit.

• Physical stores play an increasingly

pivotal role in fulfilling shoppers’ need for discovery and instant gratification through reserve-online/buy-online and pick-up in-store models and/or distributed fulfillment across the store network while reducing retailers’ initial

• utlays for inventory, reducing out-of-

stock incidents, and avoiding aggressive markdowns at the end of seasonal cycles.

In the Press

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“We’ve been blown away by the economics of our stores.” – Dave Gilboa, co-chief executive of Warby Parker “We’ve found that many customers want to engage with the merchandise before buying it. And there’s a level of service and personalization that just isn’t possible on the desktop. A lot of people see Internet as next generation and brick-and-mortar as being traditional. The way we see it is as a physical space that we can leverage to communicate

• ur brand value” – Ethan Song, CEO of

Frank & Oak “My company is an extension of me, so when I designed my stores I wanted people to feel that they were in my home.” – Tory Burch “I was reading all these reports that were down on retail brick and mortar, saying it’s all about

• nline… I think brick-and-mortar is an amazing
• pportunity to use our stores and our store staff as

a vehicle to truly engage with the community in a way no other retailers are doing.” – Jim Brett, President, West Elm “Retail observers have been significantly

• verestimating our use of online and digital

technology for shopping – we like shopping in stores.” – Nicole Flasch-Mihalko of LIM College, which carried out a survey with the National Retail Federation that found “the shopping habits of 18- to 25-year-olds suggest that just over two thirds of them prefer to shop in stores for clothing and shoes.”

In the Press

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“It’s hard for brands to engage with their customers in a purely digital way.” – Simon Mottram, CEO of Ralpha “The heart of our business is online, but we have a channel agnostic approach, which is where the world is moving to.” – Bec Clarke, founder and chief executive of Astley Clarke “It can be hard and expensive to get noticed online now. But if you spring up

• ffline – even for a short time – shoppers will

love the interaction and share their experience of going there by tweeting or sharing an image online. You can create a storm.” – Ross Bailey, founder and chief executive of Appear Here “When you look at retailers who are striving in this environment, it’s the brands focused on delivering a strong service experience. It is one

• f the ironies of our time that a digital medium,

the Internet, is making the in-person shopping experience a more humane one.” – Andy Dunn, founder and chief executive of Bonobos

Annual EBITDA Growth of 4% to 5%

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2% - 3% 1% 1.5% 0.5% (1%) Contractual Fixed Increase in Rents + Occupancy Growth Positive Releasing Spreads Expense Growth Developments Acquisitions

Durable, Long-Term Cash Flow Growth

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• High-quality malls continue to be in demand by retailers, restaurants and

entertainment venues

• Virtually no new supply of mall space since 2006 and negligible amount

expected to deliver over next 10 years – primarily from expansions

• Nearly no long-term vacancy and laddered lease expirations form durable

foundation for long-term revenue growth

Financial & Operational Highlights 2016 Guidance(a) 2015 Actual 2014 Reported 2013 Reported 2012 Reported Average Same Store NOI 4% - 5% 4.8% 4.5% 6.0% 4.2% 4.8% SS NOI Margin 75% 74% 74% 73% 72% 73% NOI 8% - 9% 5.0% 4.1% 5.0% 5.1% 5.5% EBITDA 8% - 9% 5.4% 4.9% 4.3% 7.0% 6.0% Sales PSF <10k SF $588 $570 $564 $545 Growth 3.0% 1.0% 3.6% 6.6% Occupancy Cost 13.4% 13.4% 13.0% 13.2% Lease Spreads(b) 10.8% 18.3% 12.3% 10.2% Perm Occupancy 92.3% 93.0% 92.0% 89.6% Total Occupancy 96.5% 96.7% 96.4% 94.9%

a) Figures represent mid-point of guidance that is current as of May 3, 2016, the date of GGP’s 1st quarter 2016 earnings call. b) Lease spreads are suite-to-suite.

Cash Flow & Dividends

20 2016 Guidance(a) 2015 Actual 2014 Reported 2013 Reported 2012 Reported CAGR Company FFO per Diluted Share $1.52 - $1.56 $1.44 $1.32 $1.16 $0.98 11.7% AFFO per Diluted Share $1.21 $1.09 $1.00 $0.88 $0.72 13.7% Dividends $0.80 $0.71 $0.63 $0.51 $0.42 17.5% AFFO Payout Ratio 66% 65% 63% 58% 58%

a) Figures represent mid-point of guidance that is current as of May 3, 2016, the date of GGP’s 1st quarter 2016 earnings call.

Financial Flexibility

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Debt Overview(a) ($ in millions at GGP share) Fixed Rate(b) $16,098 Variable Rate(b) $3,469 Total Debt $19,567 Remaining Term 5.9 Years Total Debt / Enterprise Value 42% Net Debt / EBITDA 8.4x Interest Coverage 2.8x Debt Maturity Ladder(c) ($ in billions at GGP share)

• Financing philosophy
• Obtain property-secured debt; minimize corporate recourse and cross-collateralization
• Laddered maturities mitigate refinancing risk and earnings volatility

a) As of March 31, 2016. Net Debt / EBITDA based on Net Debt as of March 31, 2016 and guidance for 2016 EBITDA as issued on May 2, 2016. Interest Coverage and Fixed Charge Coverage are based on estimate for 2016. b) Fixed rate debt has a weighted average interest rate of 4.4% and variable rate debt has a weighted average interest rate of 2.6%. c) As of March 31, 2016, and additionally including the $1.4B term loan extension discussed on May 3, 2016, the date of GGP’s 1st quarter 2016 earnings

• call. The Debt Maturity Ladder schedule assumes maturity extension options are exercised and approved.

$0.2 $0.5 $0.5 $2.1 $2.8 $3.1 $2.5 $1.9 $2.0 $1.7 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Sustainability

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a) GRESB stands for Global Real Estate Sustainability Benchmark.

• Committed to being an environmentally responsible

business

• Concentrated on investments that increase

environmental performance in key areas such as:

• Solar power generation
• Heating and cooling
• Lighting
• Water usage
• Waste Management
• Awarded the 2015 GreenStar and recognized as the

North American leader in the Retail – Large Cap Sector by GRESB in 2014(a)

• By the close of 2016, GGP is expected to be one of

the top ten solar energy producers in the U.S.

2016 Earnings Guidance

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Company FFO per Diluted Share $1.52 to $1.56 Adjustments (0.04) NAREIT FFO per Diluted Share $1.48 to $1.52 Depreciation (0.94) Net Income Attributable to Common Stockholders $0.54 to $0.58 Preferred Stock Dividends 0.02 Net Income Attributable to GGP $0.56 to $0.60 Key Growth Rate Assumptions: Same Store NOI 4% to 5% EBITDA Growth 8% to 9%

The guidance reflects management’s view of current and future market conditions, including assumptions with respect to Same Store NOI growth, rental rates, occupancy levels, retail sales, variable expenses, interest rates and the earnings impact of the events referenced in the Company’s 1st quarter 2016 earnings press release and previously disclosed. The guidance also reflects management’s view of capital market conditions. The estimates do not include possible future gains or losses, or the impact on operating results from other possible future property acquisitions or dispositions or capital markets activity. Earnings per share estimates may be subject to fluctuations as a result of several factors, including any gains or losses associated with disposition activity. By definition, FFO and Company FFO do not include real estate-related depreciation and amortization, provisions for impairment, or gains or losses associated with property disposition activities. This guidance is a forward-looking statement and is subject to the risks and other factors described in the Company’s 1st quarter 2016 earnings press release and in the Company’s annual and quarterly periodic report filed with the Securities and Exchange Commission. Actual results for 2016 could vary materially from the amounts presented if any of management’s assumptions are incorrect. Each amount shown represents the approximate midpoint of a range of possible outcomes and reflects management’s best estimate of the most likely outcome. For a reconciliation of the non-GAAP measures shown to their respective GAAP measure please refer to GGP’s 1st quarter 2016 earnings release and Supplemental Information available at www.ggp.com and as furnished with the Securities and Exchange Commission.

• Current as of May 3, 2016, the date of GGP’s 1st quarter 2016 earnings conference

call.

FORWARD-LOOKING STATEMENTS Certain statements made in this presentation may be deemed "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Although the Company believes the expectations reflected in any forward-looking statement are based on reasonable assumption, it can give no assurance that its expectations will be attained, and it is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks, uncertainties and other factors. Such factors include, but are not limited to, the Company's ability to refinance, extend, restructure or repay near and intermediate term debt, its indebtedness, its ability to raise capital through equity issuances, asset sales or the incurrence of new debt, retail and credit market conditions, impairments, its liquidity demands, and economic conditions. The Company discusses these and other risks and uncertainties in its annual and quarterly periodic reports filed with the Securities and Exchange Commission. The Company may update that discussion in its periodic reports, but otherwise takes no duty or obligation to update or revise these forward-looking statements, whether as a result of new information, future developments, or otherwise. Investors and others should note that the Company posts this Investor Presentation on the Investors page of its website at www.ggp.com. From time to time, the Company updates the Investor Presentation and when it does, it will be posted on the Investors section of its website at www.ggp.com. It is possible that the updates could include information deemed to be material information. Therefore, the Company encourages investors, the media and others interested in the Company to review the information posted on the Investors section of its website at www.ggp.com from time to time.

Michael Berman Executive Vice President and Chief Financial Officer michael.berman@ggp.com (312) 960-5044 Kevin Berry Senior Vice President Investor & Public Relations kevin.berry@ggp.com (312) 960-5529

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