a retail real estate company - ggp investor...

INVESTOR PRESENTATIONMARCH 2017

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

FASHION SHOWSOUTHWEST PLAZA WILLOWBROOK (NJ)

2

OVERVIEW

a) As of December 31, 2016.

MISSION STATEMENTOwn 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

S&P 500 REAL ESTATE INVESTMENT TRUST (a)

Headquarters Chicago

Retail Properties 127

States 40

Inline & Freestanding GLATotal Retail GLA

56 million121 million

Equity Market CapEnterprise Value

$22 billion$40 billion

WATER TOWER PLACE PIONEER PLACE PARK MEADOWS OAKBROOK CENTER

Sandeep Mathrani, Chief Executive Officer

Michael Berman, Executive Vice President and Chief Financial Officer

Shobi Khan, President and Chief Operating Officer

Alan Barocas, Senior Executive Vice President, Leasing

Richard Pesin, Executive Vice President, Anchors, Development and Construction

Marvin Levine, Executive Vice President and Chief Legal Officer

Brian McCarthyExecutive Vice President, Asset Management

Julie Knudson, Senior Vice President and Chief Human Resources Officer

EXECUTIVE TEAM

Tara Marszewski, Senior Vice President, Chief Accounting Officer

3

IRREPLACEABLE RETAIL REAL ESTATE IN THE U.S.

4a) 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

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%

GGP owns 100 of the top 500 regional shopping centers in the U.S.

Mid to Low QualityRetail Real Estate6.3 Billion SF19.7 SF Per Capita

High Quality Retail Real Estate1.2 Billion SF3.9 SF Per Capita

High QualityOpen-Air Centers

High QualityRegional

Shopping Centers

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.

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%

Total 1,227 3.9 100%

Type Quality

HIGH QUALITY RETAIL PROPERTIES TOTAL U.S. RETAIL REAL ESTATE GLA

GGP controls 8.2% of all High Quality

Retail Real Estate

Open-Air Centers6.4 Billion SF

20.2 SF Per Capita

Regional Shopping Centers

1.1 Billion SF3.4 SF Per Capita

5

THE U.S. IS OVER RETAILED

6a) 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.

U.S. has the highest GLA per capita by far among all developed countries

24

16

11

5 4 3 2

$14,614

$10,953

$9,239

$6,495

$8,437

$3,282

$6,323

0

5

10

15

20

25

30

U.S. Canada Australia U.K. France China Germany$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

RETAIL REAL ESTATE GLA AND SALES PER CAPITA

Retail SF per Capita Retail Sales per Capita (in U.S. Dollars)

RET

AIL

SF

PER

CA

PITA

RET

AIL

SA

LES

PER

CA

PITA

Average Center Sales/SF

At Current $493

Assuming Reduction of GLA by 25% $602

U.S. Regional Shopping Center Productivity

(a)

(b)

CHANGING THE VOCABULARYRETAIL REAL ESTATE

RETAIL REAL

ESTATE

Restaurants

Entertainment

Sources of Demand

Services

Grocery

7

Retailers, restaurants and entertainment venues are property type agnostic and want to be in high quality retail locations that attract heavy traffic.

CHANGING THE VOCABULARY RETAIL REAL ESTATE

8

57%55%

49%

54%

Bowling Alley Spa Grocery Store Brewery

% OF CUSTOMERS WHO WOULD LIKE TO SEERETAIL TYPE IN A REGIONAL SHOPPING CENTER

Source: GGP Strategy & Analytics, 2017. Sample Size= 14,000

GGP is adding these new uses to centers

Shoppers want to see new uses at regional shopping centers

HIGH QUALITY CENTERS DRAW MORE TRAFFIC

Sources: GGP proprietary traffic cameras installed in 95 properties.

AVERAGE WEEKLY TRAFFIC BY MALL GRADEBLACK FRIDAY 2016 – JANUARY 2017

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.

9

Average Weekly Traffic by Center GradeBlack Friday 2016- January 2017

24 81 84 48 62 72NUMBER OF

CENTERS

REGIONAL SHOPPING CENTERS DRAW BETWEEN 50% AND 150% MORE MARKET RESIDENTS

(a) Source for visits data is Nielsen Local 2014, 2015Notes: DMAs Used: Atlanta, Boston, Chicago, Dallas, Houston, Los Angeles, New York City, Philadelphia, San Francisco/San Jose, Washington, DC. Excludes Mills and outlet properties

AVERAGE VISITS TO CENTER PER QUARTER (a)

BASED ON RESIDENTS AGE 18+ IN TOP 10 DMAS; CENTER GRADE BY GREEN STREET

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.

GGP centers within these markets draw approximately 2.5 times the number of residents compared to lifestyle or strip centers on a quarterly basis.

REGIONAL SHOPPING CENTERS OTHER TYPES

LIFESTYLE CENTERS

STRIP CENTERS

C OR LOWERCENTERS

B CENTERSA CENTERSGGP CENTERS

613K

376K

265K 276K238K

695K

GGP

Within the largest U.S. markets, regional shopping centers consistently draw more market residents than other retail property types.

10

11

RETAIL CATEGORY SHARE OF GLA

Cistri/Urbis. Regional data represents centers larger than 300,000 sf.

46%

13%

8%

29%

6%

27%

13%11%

47%

10%

23%

15%13%

36%

6%

17% 17%

11%

45%

15%15%

21%

16%

40%

8%

0%

10%

20%

30%

40%

50%

Department Store Mini Major/Big Box Entertainment &Non-Retail

Specialty Food & Beverage

Retail Category Share of Total GLA

USA UK Australia Asia Middle East

U.S. retail is over-indexed in department stores and under-indexed in entertainment, food & beverage, and big box compared to other regions

CURATION IS KEY TO PERFORMANCE

12

RESTAURANTS PERSONAL CARE

HOME FURNISHINGS

APPAREL

ELECTRONICS

BIG BOX

GROCERY

ENTERTAINMENT

EXPERIENTIAL RETAILING

13

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

Food & Entertainment

Technology

Unique Product

Offerings

Curating the Retail

Experience Dominance in Trade Area

Sustainable Competitive Advantage

Constant Evolution

Differentiated Experience

Sustainable Relevance Cycle

OAKBROOK CENTER DEVELOPMENT CASE STUDY

Master Renovation (2012 & 2013 & 2014)• 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

Building H (2013)• Redevelop Bloomingdale's Home into The Container Store, Pirch,

and inline GLA. • Development Cost: $13.8M• Yield: 11%

Development 2011-2016 Development Results Development Pipeline

14

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.

Hotel (2014)• Ground lease of existing hotel site to new operator for remodel.



15

Parking Improvements (2016)• Enhance customer experience and path-to-purchase through

parking improvements (aesthetic, architectural, and technological elements).

Theater (2016)• Addition of new theater and food hall along with Building G

common area renovation.



16

Net value creation of $470M assuming a 3.75% cap rate on incremental NOI



17

2011 2017 Forecast Total Change % Change

Total Sales $349M $479M $130M 37%

Sales PSF <10K SF $694 $992 $298 43%

Continuing the Evolution of Oakbrook

Sears + Edutainment Provider + Fitness CenterRedevelop Sears box into downsized Sears, inline GLA, and an edutainment provider.

Fitness center concept to replace Sears Auto Center footprint.



rendering subject to change

18

19

� $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

REDEVELOPMENT ACTIVITIES

(a) Expected costs and investments to date exclude capitalized interest and overhead.(b) Return on investment represents first year stabilized cash-on-cash return, based on budgeted assumptions. Actual costs may vary.

Property DescriptionGGP’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 MallStaten 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

Projects in Pipeline

New Mall DevelopmentNorwalk, 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

20

STATEN ISLAND REDEVELOPMENTThe existing center will be extended by 285K sf and will include Dave & Buster’s, Zara, restaurants, inline space, and a new food court

BRICK AND MORTAR CAPTURES 93% OF RETAIL SALES

$151 (3.3%)

$43 (0.9%)

$38 (0.8%)

$23 (0.5%)

$131 (2.8%)

Brick and Mortar Sales

Pure Play E-commerce

Sales

Omnichannel Sales

Non Merchandise Receipts(shipping & handling, auction commissions, and other costs) Mail Order &

E-Commerce Auction Sales

Total Sales (billions)

% of TotalSales

$4,221 89.7% Direct brick and mortar sales

+ $143 3.0%Online sales from retailers with brick and mortar presence (Omnichannel Sales)

$4,364 92.7% Brick and mortar related retail sales

+ $144 3.1% Mail order and e-commerce auction sales

+ $26 0.6%Non-merchandise receipts (including shipping, electronicauction commissions)

+ $173 3.7% Pure-play e-commerce

$4,708 100% Total retail sales

Source: ICSC analysis of 2015 U.S. Census data

Buy Online, Fulfill in Store

Buy Online, Fulfill From Warehouse

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

Bonobos launches online

First Guideshop launches in NYC

30 Guideshops across the U.S.

Warby Parker launches online

6 showrooms launch across

the U.S.

47 Showrooms across the U.S.

30 Kiosks launch in regional shopping centers.

Amazon launches

online

100 Guideshops

across the U.S. by 2020

800-1,000 physical locations

in the future

2011 2013 20161994 2007 2008 2010 2012

Fabletics launches

online

18 locations across the U.S.

Sugarfina launches

online

First locationopens

21 locations across the U.S.

Source

Wall StreeJournal

Wall StreetJournal

Amazon.co

Fabletics.co

Sugarfina.co

23

Athleta opens first flagship location in

San Francisco

Amazon Go announced, and Amazon Books opens 3 locations

Athleta expands to

120 locations

Athleta acquired by Gap

Online and mail order only.

GapInc.com

Amazon to open 5

additional Amazon

Books, for a total of 8.

Sources: Company websites and/or public statements

2017 and Beyond

SUSTAINABILITY

2015 IMPACT AT A GLANCE

Diverted 54,300 tons of waste fromlandfills; enough waste to fill over4,500 garbage trucks.

Reduced water consumption by 64million gallons; enough water to fillalmost 100 Olympic-size swimmingpools.

Top 10 U.S. company by solarcapacity.

Eliminated 23,200 metric tons ofcarbon dioxide equivalents, equal totaking 4,700 cars off U.S. roads.

Upgrades to power saved 44.5million kilowatt hours annually;equal to removing 4,200 homesfrom the electrical grid.

Since 2011, reduced electricityconsumption by 215.8 millionkilowatt hours; enough electricity topower all the homes in Coral Gables,FL for one year.

� 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

24

GGP’S DIGITAL INITIATIVES

25

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.

DEBT PROFILE

26

Overview as of 12/31/2016($ in millions at GGP share)

Fixed Rate $14,759

Variable Rate $3,575

Total Debt $18,335

Remaining Term(a) 5.5 Years

Total Debt / Enterprise Value 45.5%

Net Debt / EBITDA (b) 7.9x

Interest Coverage 2.8x

Debt Maturity Ladder(a)($ in billions at GGP share)

a) Assumes maturity extension options are exercised and approved.b) 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

$0.1$0.5

$2.1$2.8 $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 +

FORWARD-LOOKING STATEMENTS

Certain statements made in this presentation may be deemed "forward-looking statements" within the meaning of the PrivateSecurities Litigation Reform Act of 1995. Although the Company believes the expectations reflected in any forward-lookingstatement are based on reasonable assumption, it can give no assurance that its expectations will be attained, and it is possiblethat 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, restructureor repay near and intermediate term debt, its indebtedness, its ability to raise capital through equity issuances, asset sales or theincurrence of new debt, retail and credit market conditions, impairments, its liquidity demands, and economic conditions. TheCompany discusses these and other risks and uncertainties in its annual and quarterly periodic reports filed with the Securitiesand Exchange Commission. The Company may update that discussion in its periodic reports, but otherwise takes no duty orobligation to update or revise these forward-looking statements, whether as a result of new information, future developments, orotherwise.

Investors and others should note that the Company posts this Investor Presentation on the Investors page of its website atwww.ggp.com. From time to time, the Company updates the Investor Presentation and when it does, it will be posted on theInvestors section of its website at www.ggp.com. It is possible that the updates could include information deemed to be materialinformation. Therefore, the Company encourages investors, the media and others interested in the Company to review theinformation posted on the Investors section of its website at www.ggp.com from time to time.

Michael BermanExecutive Vice President and Chief Financial [email protected]

Kevin BerrySenior Vice PresidentInvestor & Public [email protected]

27

Contact Information:

A R E T A I L R E A L E S T A T E C O M P A N Y

a retail real estate company - ggp investor...

Documents