A RETAIL REAL ESTATE COMPANY
GLENDALE GALLERIA
SOUTHWEST PLAZA
INVESTOR PRESENTATION
MARCH 2017
ALA MOANA CENTER
FASHION SHOW
WILLOWBROOK (NJ)
OVERVIEW
MISSION STATEMENT
S&P 500 REAL ESTATE INVESTMENT TRUST (a)
Headquarters
Chicago
Retail Properties
127
States
40
Inline & Freestanding GLA
Total Retail GLA
56 million
121 million
Equity Market Cap
Enterprise Value
$22 billion
$40 billion
Own and operate best-in-class retail properties
that provide an outstanding environment and
experience for our Communities, Retailers,
Employees, Consumers and Shareholders.
CORE VALUES
• H – Humility
• A – Attitude
• D – Do The Right Thing
• T – Together
• O – Own It
Picture
WATER TOWER PLACE
a)
As of December 31, 2016.
PIONEER PLACE
PARK MEADOWS
OAKBROOK CENTER
2
EXECUTIVE TEAM
Sandeep Mathrani,
Chief Executive Officer
Marvin Levine,
Executive Vice President and
Chief Legal Officer
Shobi Khan,
President and
Chief Operating Officer
Brian McCarthy
Executive Vice President,
Asset Management
Michael Berman,
Executive Vice President and
Chief Financial Officer
Julie Knudson,
Senior Vice President and
Chief Human Resources Officer
Alan Barocas,
Senior Executive Vice President, Leasing
Tara Marszewski,
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.
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
4
HIGH QUALITY RETAIL PROPERTIES
TOTAL U.S. RETAIL REAL ESTATE GLA
GLA
(in millions)
SF Per Capita
% of Total
High Quality GLA
High Quality(a) Regional Shopping Centers
495
1.6
40%
High Quality(b) Open-Air Centers
732
2.3
60%
1,227
3.9
100%
Total
Type
Quality
Regional
Shopping Centers
1.1 Billion SF
3.4 SF Per Capita
Open-Air Centers
6.4 Billion SF
20.2 SF Per Capita
High Quality
Retail Real Estate
1.2 Billion SF
3.9 SF Per Capita
Mid to Low Quality
Retail Real Estate
6.3 Billion SF
19.7 SF Per Capita
High Quality
Open-Air Centers
High Quality
Regional
Shopping
Centers
GGP controls 8.2% of
all High Quality
Retail Real Estate
a)
b)
“High Quality” represents malls rated B+ or better by Green Street Advisors.
“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
RETAIL REAL ESTATE GLA AND SALES PER CAPITA
$16,000
$14,614
$14,000
25
24
$10,953
$12,000
20
$9,239
15
$10,000
$8,437
$6,495
16
$6,323
$8,000
$6,000
10
11
5
$3,282
5
$2,000
4
3
2
China
Germany
0
U.S.
Canada
Australia
Retail SF per Capita
U.K.
France
$4,000
RETAIL SALES PER CAPITA
RETAIL SF PER CAPITA
30
(a)
$0
Retail Sales per Capita (in U.S. Dollars)
U.S. Regional Shopping Center Productivity
Average Center
Sales/SF (b)
At Current
$493
Assuming Reduction of GLA by 25%
$602
a)
ICSC Country Fact Sheets.
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.
6
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
Sources of
Demand
RETAIL
REAL
ESTATE
7
CHANGING THE VOCABULARY
RETAIL REAL ESTATE
Shoppers want to see new uses at regional shopping centers
57%
% OF CUSTOMERS WHO WOULD LIKE TO SEE
RETAIL TYPE IN A REGIONAL SHOPPING CENTER
55%
54%
49%
Bowling Alley
Spa
Grocery Store
Brewery
GGP is adding these new uses to centers
Source: GGP Strategy & Analytics, 2017. Sample Size= 14,000
8
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.
Average
Weekly
Traffic BY
by Center
Grade
AVERAGE
WEEKLY
TRAFFIC
MALL G
RADE
Black
Friday
2016January
2017
BLACK
FRIDAY
2016
– JANUARY
2017
Sources: GGP proprietary traffic cameras installed in 95 properties.
9
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)
BASED ON RESIDENTS AGE 18+ IN TOP 10 DMAS; CENTER GRADE BY GREEN STREET
GGP
OTHER TYPES
REGIONAL SHOPPING CENTERS
695K
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+)
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.
613K
GGP centers within these markets draw
approximately 2.5 times the number of residents
compared to lifestyle or strip centers on a
quarterly basis.
376K
265K
24
81
84
48
GGP
CENTERS
A CENTERS
B CENTERS
C OR LOWER
CENTERS
276K
NUMBER OF
CENTERS
238K
62
72
LIFESTYLE
CENTERS
STRIP
CENTERS
(a) Source for visits data is Nielsen Local 2014, 2015
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
10
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%
40%
40%
30%
36%
29%
27%
23%
20%
45%
21%
17%
15%
13% 13%
15%
17%
8%
10%
11%
13%
16%
15%
11%
10%
6%
6%
8%
0%
Department Store
Mini Major/Big Box
USA
Cistri/Urbis. Regional data represents centers larger than 300,000 sf.
Entertainment &
Non-Retail
UK
Australia
Asia
Specialty
Food & Beverage
Middle East
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CURATION IS KEY TO PERFORMANCE
RESTAURANTS
PERSONAL CARE
HOME FURNISHINGS
ENTERTAINMENT
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
Environment
Unique
Product
Offerings
Curating the
Retail
Experience
Technology
Sustainable Relevance Cycle
Food &
Entertainment
Differentiated
Experience
Dominance in
Trade Area
Constant
Evolution
Sustainable
Competitive
Advantage
13
OAKBROOK CENTER DEVELOPMENT CASE STUDY
Master Renovation (2012 & 2013 & 2014)
Building H (2013)
•
•
•
•
•
Full mall common area space cosmetic update
Construction of three glass box pavilions ideal for
incubating newer retail concepts
Installation of a video screen in the common area for
community events
Development 2011-2016
•
Redevelop Bloomingdale's Home into The Container Store, Pirch,
and inline GLA.
Development Cost: $13.8M
Yield: 11%
Development Results
Development Pipeline
14
OAKBROOK CENTER DEVELOPMENT CASE STUDY
Neiman Marcus Restaurant Development (2013)
•
Convert lower level of Neiman Marcus into 2 restaurants,
followed by multi-million dollar interior renovation of Neiman
Marcus store.
Development 2011-2016
Hotel (2014)
•
Ground lease of existing hotel site to new operator for remodel.
Development Results
Development Pipeline
15
OAKBROOK CENTER DEVELOPMENT CASE STUDY
Parking Improvements (2016)
•
Enhance customer experience and path-to-purchase through
parking improvements (aesthetic, architectural, and technological
elements).
Development 2011-2016
Theater (2016)
•
Addition of new theater and food hall along with Building G
common area renovation.
Development Results
Development Pipeline
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OAKBROOK CENTER DEVELOPMENT CASE STUDY
Net value creation of $470M assuming a 3.75% cap rate on incremental NOI
Total Sales
Sales PSF <10K SF
Development 2011-2016
2011
2017 Forecast
Total Change
% Change
$349M
$479M
$130M
37%
$694
$992
$298
43%
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
REDEVELOPMENT ACTIVITIES
$1.3 billion of projects under construction or in the pipeline
Anticipated spend of $300 million to $400 million annually to acquire and redevelop
anchor boxes
Property
Description
GGP’s Total
Projected Share
of Cost ($)
GGP’s
Investment
to Date ($)(a)
Expected
Return on
Investment(b)
Stabilized
Year
(in millions, at share)
Under Construction
Staten Island Mall
Staten Island, NY
Expansion
231
28
7-9%
2019
Other Projects
Redevelopment projects at various
properties
394
236
6-8%
2017-2018
Total Projects Under Construction
625
264
New Mall
Development
Norwalk, CT
Ground up mall development
285
51
8-10%
2020
Other Projects
Redevelopment projects at various
properties
368
70
8-9%
TBD
Total Projects In The Pipeline
653
121
Projects in Pipeline
(a) Expected
(b) Return
costs and investments to date exclude capitalized interest and overhead.
on investment represents first year stabilized cash-on-cash return, based on budgeted assumptions. Actual costs may vary.
19
STATEN ISLAND REDEVELOPMENT
The existing center will be extended by 285K sf and will include Dave & Buster’s, Zara,
restaurants, inline space, and a new food court
20
BRICK AND MORTAR CAPTURES 93% OF RETAIL SALES
Omnichannel
Sales
Buy Online,
Non Merchandise Receipts
Fulfill in Store (shipping & handling,
$38
$23
auction commissions,
Buy Online,
(0.8%)
(0.5%)
and other costs)
Mail Order &
Fulfill From
$43
$131
E-Commerce
Warehouse
(0.9%)
(2.8%)
Auction Sales
Pure Play
$151
E-commerce
(3.3%)
Sales
Brick and Mortar Sales
Source: ICSC analysis of 2015 U.S. Census data
Total Sales
(billions)
% of Total
Sales
$4,221
89.7%
$143
3.0%
$4,364
92.7%
+
$144
3.1%
Mail order and e-commerce
auction sales
+
$26
0.6%
Non-merchandise receipts
(including shipping, electronic
auction commissions)
+
$173
3.7%
Pure-play e-commerce
$4,708
100%
Total retail sales
+
Direct brick and mortar sales
Online sales from retailers with
brick and mortar presence
(Omnichannel Sales)
Brick and mortar related
retail sales
21
ONE-CHANNEL GENERATES HIGHER SALES
Source: “Shopping Centers: America’s First and Foremost Marketplace,” ICSC, October 2014.
22
E-COMMERCE EXPANSION INTO BRICK AND MORTAR
1994
2007
2008
2010
2011
2012
2013
2016
First Guideshop
launches in NYC
Bonobos
launches online
Warby Parker
launches online
30 Guideshops
across the U.S.
6 showrooms
launch across
the U.S.
47 Showrooms
across the U.S.
2017 and
Beyond
100
Guideshops
across the U.S.
by 2020
800-1,000
physical locations
in the future
30 Kiosks Amazon Go
launch in announced,
regional and Amazon
shopping Books opens
3 locations
centers.
Amazon
launches
online
Sugarfina
launches
online
Athleta acquired
by Gap
Online and mail
order only.
Sources: Company websites and/or public statements
Athleta opens
first flagship
location in
San Francisco
Fabletics
launches
online
18 locations
across the U.S.
First location
opens
21 locations
across the U.S.
Athleta
expands to
120 locations
Amazon to
open 5
additional
Amazon
Books, for a
total of 8.
Source
Wall Stree
Journal
Wall Street
Journal
Amazon.co
Fabletics.co
Sugarfina.co
GapInc.com
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SUSTAINABILITY
Commitment to environmental responsibility
Awarded the 2015 Green Star and recognized as the North American
leader in the Retail – Large Cap Sector by GRESB in 2014
2015 IMPACT AT A GLANCE
Top 10 U.S. company by solar
capacity.
Eliminated 23,200 metric tons of
carbon dioxide equivalents, equal to
taking 4,700 cars off U.S. roads.
Reduced water consumption by 64
million gallons; enough water to fill
almost 100 Olympic-size swimming
pools.
Upgrades to power saved 44.5
million kilowatt hours annually;
equal to removing 4,200 homes
from the electrical grid.
Diverted 54,300 tons of waste from
landfills; enough waste to fill over
4,500 garbage trucks.
Since 2011, reduced electricity
consumption
by
215.8
million
kilowatt hours; enough electricity to
power all the homes in Coral Gables,
FL for one year.
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GGP’S DIGITAL INITIATIVES
PRODUCT SEARCH
PARKING
GGP has invested in digital
initiatives to solve customer
pain points in the shopping
process, such as parking and
locating desired products.
25
DEBT PROFILE
Overview as of 12/31/2016
Debt Maturity Ladder(a)
($ in millions at GGP share)
Fixed Rate
$14,759
Variable Rate
Total Debt
Remaining
($ in billions at GGP share)
$3,575
$18,335
Term(a)
Total Debt / Enterprise Value
5.5 Years
45.5%
Net Debt / EBITDA (b)
7.9x
Interest Coverage
2.8x
a)
b)
$2.1
$0.1
$2.8
$0.5
$3.0
$2.4
$1.9
$1.6
$1.7
$0.5
$0.5
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 +
Assumes maturity extension options are exercised and approved.
Refer to page 4 for Company Ebitda, and page 27 for Net Debt in GGP’s Fourth Quarter 2016 Supplemental available at Investor.GGP.com
26
Contact Information:
Michael Berman
Executive Vice President and
Chief Financial Officer
[email protected]
Kevin Berry
Senior Vice President
Investor & Public Relations
[email protected]
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.
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A RETAIL REAL ESTATE COMPANY