Investor Presentation May 2016

Investor Presentation
May 2016
GGP Overview
S&P 500 Real Estate Investment Trust(a)
NYSE Ticker
Headquarters
Employees
Retail Properties
States
GGP
Chicago
1,700
128
40
Total Retail GLA
121 million
Enterprise Value
$46.1 billion
Natick Mall, Natick, MA
The Woodlands Mall, Houston, Texas
a)
As of March 31, 2016.
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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
Nordstrom Grand Opening – October 2015
Operating Highlights(a)
Tenant Sales Growth(b)
H – Humility
4.0%
Occupancy Cost
13.7%
Leased
95.9%
Lease Spreads(c)
12.0%
Shops at Merrick Park, Coral Gables, FL
A – Attitude
D – Do The Right Thing
T – Together
O – Own It
a)
b)
c)
All Same Store operating metrics as of March 31, 2016.
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.
Lease spreads are suite-to-suite and represent 2016 commencements.
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Irreplaceable Retail Properties in the U.S.
 GGP owns 100 of the top 500 malls in the U.S.
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.
4
GGP Outpaces U.S. Retail Growth Nearly
2-To-1 With “A” Centers Driving The
Majority Of Growth
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.
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Traffic (in millions) – Bar Graph
Sales Per Square Foot – Line Graph
Traffic Across The GGP Portfolio Is Steady,
With YoY Increases Across All Classes Of
Assets
Estimated Total Visits to GGP Centers
Year-Over-Year Traffic Growth
Source: GGP.
2012
2013
2014
2015
4%
3%
-
2%
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Redevelopment of Department Store Boxes
 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
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Department Store Performance
• 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%.(a)
DEPARTMENT STORES vs. GGP INLINE SHOPS
2005-2015
Total Sales in GGP Portfolio
Total Non-Anchor GAFO Sales, Comp Basis
+33%
Sales-Reporting Anchor/Department Stores
-10%
Total Industry Sales
a)
2005-2015 % Change
2005-2015 % Change
GAFO Sales excluding Department Stores
+30%
Department Stores excluding Leased
Departments
-23%
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.
8
Regional Mall Visitation by Generation
•
Millennials have the highest propensity of any generation to visit regional malls on a
regular basis.
PROPENSITY TO SHOP AT LEAST ONCE EVERY THREE MONTHS, 100 = AVG SHOPPER
140
120
116
107
100
92
83
80
60
40
20
0
Millennials
18-34
Gen Xers
35-49
Baby Boomers
50-65
Silents
Over 65
Sources: GGP Strategy & Analytics, Nielsen Local, 2014-2015. 400,489 respondents.
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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
Acquires Associated
in 1995
in 1986
Neiman Group spun
1986 Sold to May Dept. 1986 Acquired by Campeau
McAlpins
to General Cinema
Aquired Mercantile
Acquired Allied in
Sold to Dillard's
1988
1998
1998
Acquires Dayton Hudson
Becomes Federated
1988 Acquired by Federated
2005
Marshall Field's
Becomes Macy's, Inc.
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.
At the peak of department
store nameplates, there were
56 different department store
brands
2007
APPROXIMATE CURRENT STORE COUNTS
Macy’s
Dillard’s
775
270
Hudson’s Bay
Company (US)
90
Neiman
Marcus
40
Nordstrom
120
10
Oakbrook Center
Conversions
Former Store
Sears
Bloomingdale's
Neiman Marcus
(Lower Lev el)
Productivity
Store Category
I nline Retail
Anchors
New Stores
TBD Dining/Entertainment
Pirch, Aritzia, Boss, lululemon,
Tommy Bahama
Perry's Steakhouse,
Old Town Pour House
2010
$668
$233
2015
$911
$271
Change
+36%
+17%
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Natick Mall
Conversions
Former Store
JCPenney
Sears
Productivity
Store Category
I nline Retail
Anchors
New Stores
Wegmans
TBD Entertainment
2010
$552
$181
2015
$671
$201
Change
+22%
+11%
12
Cumberland Mall
Conversions
Former Store
JCPenney
Dav ison's
Productivity
Store Category
I nline Retail
Anchors
New Stores
Costco
Buffalo Wild Wings,
Cheesecake Factory, Chico's, H&M,
Maggiano's, P.F. Chang's, Soma,
Stoney Riv er, Ted's Montana Grill
2010
$379
$275
2015
$610
$306
Change
+61%
+12%
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Omni-Channel Generates Higher Sales
Source: ICSC
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eCommerce Retailers are Opening Brick
and Mortar Stores
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
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
Accessories
Warby Parker
Just Fab
Shinola
Classic Specs
Adore Me
The Tie Bar
Raden
Jewelry
Baublebar
Blue Nile
Other
Amazon
Services
Grocery
Restaurants
Entertainment

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
outlays for inventory, reducing out-ofstock incidents, and avoiding
aggressive markdowns at the end of
seasonal cycles.
Sources of Mall
Demand
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In the Press
“We’ve been blown away by the
economics of our stores.” – Dave
Gilboa, co-chief executive of Warby
Parker
“I was reading all these reports that were down on
retail brick and mortar, saying it’s all about
online… I think brick-and-mortar is an amazing
opportunity 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
overestimating 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.”
“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
“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
our brand value” – Ethan Song, CEO of
Frank & Oak
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In the Press
“It’s hard for brands to engage with their customers in a purely digital way.” – Simon Mottram,
CEO of Ralpha
“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
of 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
“It can be hard and expensive to get
noticed online now. But if you spring up
offline – 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
“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
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Annual EBITDA Growth of 4% to 5%
Contractual Fixed
Increase in Rents +
Occupancy Growth
2% - 3%
Positive Releasing
Spreads
1%
Expense Growth
(1%)
Developments
1.5%
Acquisitions
0.5%
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Durable, Long-Term Cash Flow Growth
 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
4% - 5%
4.8%
4.5%
6.0%
4.2%
4.8%
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%
$588
$570
$564
$545
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%
Same Store NOI
SS NOI Margin
Sales PSF <10k SF
Growth
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.
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Cash Flow & Dividends
2016
Guidance(a)
2015
Actual
2014
Reported
2013
Reported
2012
Reported
CAGR
$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
$0.42
17.5%
66%
65%
63%
58%
58%
Company FFO per Diluted Share
AFFO Payout Ratio
a)
Figures represent mid-point of guidance that is current as of May 3, 2016, the date of GGP’s 1st quarter 2016 earnings call.
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Financial Flexibility
 Financing philosophy
•
Obtain property-secured debt; minimize corporate recourse and cross-collateralization
•
Laddered maturities mitigate refinancing risk and earnings volatility
Debt Maturity Ladder(c) ($ in billions at GGP share)
Debt Overview(a) ($ in millions at GGP share)
Fixed Rate(b)
Variable Rate(b)
Total Debt
Remaining Term
$16,098
$3,469
$2.8
$19,567
$2.1
$3.1
$2.5
5.9 Years
Total Debt / Enterprise Value
42%
Net Debt / EBITDA
8.4x
Interest Coverage
2.8x
$0.2
$0.5
$1.9
$2.0
$1.7
$0.5
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
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.
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Sustainability
 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.
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a)
GRESB stands for Global Real Estate Sustainability Benchmark.
2016 Earnings Guidance
 Current as of May 3, 2016, the date of GGP’s 1st quarter 2016 earnings conference
call.
Company FFO per Diluted Share
Adjustments
NAREIT FFO per Diluted Share
Depreciation
Net Income Attributable to Common Stockholders
Preferred Stock Dividends
Net Income Attributable to GGP
$1.52 to $1.56
(0.04)
$1.48 to $1.52
(0.94)
$0.54 to $0.58
0.02
$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.
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Contact Information:
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
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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