A R E T A I L R E A L E S T A T E C O M P A N Y GLENDALE GALLERIA ALA MOANA CENTER WILLOWBROOK (NJ) SOUTHWEST PLAZA FASHION SHOW INVESTOR PRESENTATION MARCH 2017
OVERVIEW MISSION STATEMENT S&P 500 REAL ESTATE INVESTMENT TRUST (a) Own and operate best-in-class retail properties Headquarters Chicago that provide an outstanding environment and experience for our Communities, Retailers, Retail Properties 127 Employees, Consumers and Shareholders. States 40 CORE VALUES H – Humility Inline & Freestanding GLA 56 million • Total Retail GLA 121 million A – Attitude • D – Do The Right Thing • Equity Market Cap $22 billion Enterprise Value $40 billion T – Together • O – Own It • Picture WATER TOWER PLACE PIONEER PLACE PARK MEADOWS OAKBROOK CENTER 2 a) As of December 31, 2016.
EXECUTIVE TEAM Marvin Levine, Sandeep Mathrani, Executive Vice President and Chief Executive Officer Chief Legal Officer Brian McCarthy Shobi Khan, Executive Vice President, President and Asset Management Chief Operating Officer Julie Knudson, Michael Berman, Senior Vice President and Executive Vice President and Chief Human Resources Officer Chief Financial Officer Alan Barocas, Tara Marszewski, Senior Executive Vice President, Leasing Senior Vice President, Chief Accounting Officer Richard Pesin, Executive Vice President, Anchors, Development and Construction 3
IRREPLACEABLE RETAIL REAL ESTATE IN THE U.S. GGP owns 100 of the top 500 regional shopping centers in the U.S. Sales and NOI Contribution (a) Top Retail Properties Sales PSF <10K SF (b) % of Company NOI (c) Top 10 $835 24% Top 30 $737 51% Top 50 $664 69% Top 100 $582 96% a) Retail properties ranked by trailing 12 months NOI ending December 31, 2016. Table excludes Christiana Mall. 4 b) Sales per square foot for trailing 12 months ended December 31, 2016 for comparable tenants occupying space less than 10,000 square feet. c) Company NOI for 2016
HIGH QUALITY RETAIL PROPERTIES TOTAL U.S. RETAIL REAL ESTATE GLA GLA % of Total SF Per Capita (in millions) High Quality GLA High Quality (a) Regional Shopping Centers 495 1.6 40% High Quality (b) Open-Air Centers 732 2.3 60% Total 1,227 3.9 100% Type Quality 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 Retail Real Estate Open-Air Centers 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 controls 8.2% of all High Quality Retail Real Estate a) “High Quality” represents malls rated B+ or better by Green Street Advisors. b) “High Quality” represents strip centers rated with a Trade Area Power score of 75-100 by Green Street Advisors. 5
THE U.S. IS OVER RETAILED U.S. has the highest GLA per capita by far among all developed countries (a) RETAIL REAL ESTATE GLA AND SALES PER CAPITA 30 $16,000 $14,614 RETAIL SF PER CAPITA $14,000 RETAIL SALES PER CAPITA 25 $10,953 $12,000 24 20 $9,239 $10,000 $8,437 15 $8,000 $6,495 $6,323 16 $6,000 10 11 $3,282 $4,000 5 $2,000 5 4 3 2 0 $0 U.S. Canada Australia U.K. France China Germany Retail SF per Capita Retail Sales per Capita (in U.S. Dollars) U.S. Regional Shopping Center Productivity Average Center (b) Sales/SF At Current $493 Assuming Reduction of GLA by 25% $602 a) ICSC Country Fact Sheets. 6 b) At Current” is the average center sales per square foot data from Green Street Advisors, while “Assuming Reduction of GLA by 25%” removes 25% of lowest quality centers by productivity and redistributes sales to remaining centers.
CHANGING THE VOCABULARY RETAIL REAL ESTATE Retailers, restaurants and entertainment venues are property type agnostic and want to be in high quality retail locations that attract heavy traffic. Services Entertainment Restaurants Grocery RETAIL REAL ESTATE Sources of Demand 7
CHANGING THE VOCABULARY RETAIL REAL ESTATE Shoppers want to see new uses at regional shopping centers % OF CUSTOMERS WHO WOULD LIKE TO SEE RETAIL TYPE IN A REGIONAL SHOPPING CENTER 57% 55% 54% 49% Bowling Alley Spa Grocery Store Brewery GGP is adding these new uses to centers 8 Source: GGP Strategy & Analytics, 2017. Sample Size= 14,000
HIGH QUALITY CENTERS DRAW MORE TRAFFIC GGP began tracking property-level traffic during the 2016 holiday shopping season. Within the GGP portfolio, A properties draw 1.6X more shoppers than B+ properties and 2.1X more shoppers than B properties. A VERAGE W EEKLY T RAFFIC BY M ALL G RADE Average Weekly Traffic by Center Grade Black Friday 2016- January 2017 B LACK F RIDAY 2016 – J ANUARY 2017 9 Sources: GGP proprietary traffic cameras installed in 95 properties.
REGIONAL SHOPPING CENTERS DRAW BETWEEN 50% AND 150% MORE MARKET RESIDENTS Within the largest U.S. markets, regional shopping centers consistently draw more market residents than other retail property types. AVERAGE VISITS TO CENTER PER QUARTER (a) B ASED ON R ESIDENTS A GE 18+ IN T OP 10 DMA S ; C ENTER G RADE BY G REEN S TREET OTHER TYPES GGP REGIONAL SHOPPING CENTERS 695 K Analysis of 371 retail centers covered in Nielsen Local data within the 10 most-populated DMAs in the United States reveals that residents (age 18+) 613 K shop regional shopping centers nearly 2 times more often than lifestyle centers or strip centers, depending on the grade of center as determined by Green Street Advisors. GGP centers within these markets draw approximately 2.5 times the number of residents compared to lifestyle or strip centers on a 376 K quarterly basis. 265 K 276 K 238 K NUMBER OF 81 84 48 62 24 72 CENTERS GGP C OR LOWER LIFESTYLE STRIP A CENTERS B CENTERS CENTERS CENTERS CENTERS CENTERS (a) Source for visits data is Nielsen Local 2014, 2015 10 Notes: DMAs Used: Atlanta, Boston, Chicago, Dallas, Houston, Los Angeles, New York City, Philadelphia, San Francisco/San Jose, Washington, DC. Excludes Mills and outlet properties
RETAIL CATEGORY SHARE OF GLA U.S. retail is over-indexed in department stores and under-indexed in entertainment, food & beverage, and big box compared to other regions Retail Category Share of Total GLA 50% 47% 46% 45% 40% 40% 36% 29% 30% 27% 23% 21% 20% 17% 17% 16% 15% 15% 15% 13% 13% 13% 11% 11% 10% 8% 8% 10% 6% 6% 0% Department Store Mini Major/Big Box Entertainment & Specialty Food & Beverage Non-Retail USA UK Australia Asia Middle East Cistri/Urbis. Regional data represents centers larger than 300,000 sf. 11
CURATION IS KEY TO PERFORMANCE RESTAURANTS PERSONAL CARE ENTERTAINMENT HOME FURNISHINGS APPAREL BIG BOX ELECTRONICS GROCERY 12
EXPERIENTIAL RETAILING Experiences and changing consumption patterns are having a major impact on retail formats. In response to this change, GGP looks for opportunities to update centers by remerchandising and refreshing to maintain a differentiated consumer experience and thus a sustainable competitive advantage for the future. Events & Social Sustainable Relevance Cycle Environment Curating the Unique Food & Retail Product Entertainment Offerings Experience Differentiated Dominance in Experience Trade Area Technology Sustainable Constant Competitive Evolution Advantage 13
OAKBROOK CENTER DEVELOPMENT CASE STUDY Master Renovation (2012 & 2013 & 2014) Building H (2013) Full mall common area space cosmetic update Redevelop Bloomingdale's Home into The Container Store, Pirch, • • Construction of three glass box pavilions ideal for and inline GLA. • incubating newer retail concepts Development Cost: $13.8M • Installation of a video screen in the common area for Yield: 11% • • community events Development 2011-2016 Development Results Development Pipeline 14
OAKBROOK CENTER DEVELOPMENT CASE STUDY Neiman Marcus Restaurant Development (2013) Hotel (2014) Convert lower level of Neiman Marcus into 2 restaurants, Ground lease of existing hotel site to new operator for remodel. • • followed by multi-million dollar interior renovation of Neiman Marcus store. Development 2011-2016 Development Results Development Pipeline 15
OAKBROOK CENTER DEVELOPMENT CASE STUDY Parking Improvements (2016) Theater (2016) Enhance customer experience and path-to-purchase through Addition of new theater and food hall along with Building G • • parking improvements (aesthetic, architectural, and technological common area renovation. elements). Development 2011-2016 Development Results Development Pipeline 16
OAKBROOK CENTER DEVELOPMENT CASE STUDY Net value creation of $470M assuming a 3.75% cap rate on incremental NOI 2011 2017 Forecast Total Change % Change Total Sales $349M $479M $130M 37% Sales PSF <10K SF $694 $992 $298 43% Development 2011-2016 Development Results Development Pipeline 17
OAKBROOK CENTER DEVELOPMENT CASE STUDY Continuing the Evolution of Oakbrook Sears + Edutainment Provider + Fitness Center Redevelop Sears box into downsized Sears, inline GLA, and an edutainment provider. Fitness center concept to replace Sears Auto Center footprint. rendering subject to change Development 2011-2016 Development Results Development Pipeline 18
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