2 THE MACERICH COMPANY An SampP 500 Company Macerich NYSE MAC a real estate investment trust REIT was founded in 1972 with the IPO in March 1994 In May 2013 Macerich joined the SampP 500 ID: 1019866
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2. Trends in Brick & Mortar Retail Shopping 2
3. THE MACERICH COMPANYAn S&P 500 CompanyMacerich (NYSE: MAC), a real estate investment trust (“REIT”), was founded in 1972 with the IPO in March 1994.In May 2013, Macerich joined the S&P 500.The premier, pure-play high-end mall REIT, Macerich owns an unparalleled collection of assets in the nation’s most desirable and highest-barrier-to-entry markets. Total market capitalization is over $20B.Tysons Corner Center – Tysons Corner, VAThe Shops at North Bridge – Chicago, ILSanta Monica Place – Santa Monica, CA2
4. 4MacerichE-Commerce
5. MacerichClicks vs Bricks55
6. Two ModelsBrick and MortarPhysical stores, face to face with customersOnline ShoppingConsumers purchase goods and services from a seller in real timeClicks vs Bricks66
7. 7The InternetE-Commerce
8. 88.2% in 2016% of Total US Retail Sales8
9. 9OnlineUS Retail E-Commerce Sales 2015-2021In $ Billions, % change and % of total Retail sales Note: Includes products or services ordered using the internet, regardless of method of payment or fulfillment; excludes travel and event tickets.Source: eMarketer, January 2017
10. Mobile10E-Commerce
11. 11Department StoresSupermarketsSpecialty StoresWarehousesMom & PopLuxuryStoresDiscountOutletStoresStrip CentersPower CentersCommunity CentersNeighborhood CentersOutlet MallsFood & RestaurantsLifestyleSuper-Regional MallsRegional MallsServicesBrick & Mortar Retail
12. Key Figures12Brick & Mortar Retail formatsRetail Real Estate2016Total number of Shopping Centers (US)115,910Regional Malls (400 to 800,000 sf)595Super Regional Malls (800,000 sf and above)607LifeStyle500Outlet 376Shopping Center Sales$2.64 TrillionEmployment12.9 millionSource ICSC
13. The Retail “Apocalypse”13Retail
14. Net gains14Bricks & Mortar Retail5 Chains represent 28% of the announced closings16 Chains represent 48% of the total
15. 15MALL CONVERSATIONSThe HeadlinesThe Fine PrintTraffic is DecliningCountering traffic perceptions with consumer research findings - higher conversion rates, increased average spend and visit frequency, along with shorter dwell timesMalls are DyingNOT ALL MALLSHigher quality assets remain viable and continue to evolve, while lower tier malls will be disproportionately affected by closuresA-level properties account for only 20% of malls, yet represent 72% of mall sales30% in C and D categoriesDepartment Stores are Going out of BusinessConsolidation is occurringAnnounced closings by Macy’s, JCPenney and Sears/Kmart total approximately 380 stores (2016-2017)Pruning and culling unproductive locations is healthy – “Future-Proofing”Estimated $2.5B in sales will flow to other retailers as a result, including $1.5B. in apparel salesWHAT PEOPLE ARE HEARING
16. BROADER TRENDSMALL CONVERSATIONSSome tenants struggling to adaptTransition and turmoilStore closings Macy’s, Office Depot, Toys “R” Us, Sears, JC Penney, GapSmaller StoresLess carsPop up StoresShort term retailersNo longer seasonal or transitoryWay to test concepts & ideasLow riskOnline retailersMore experientialEntertainment concepts (gyms, carts, golf, skydiving, bowling, escape rooms. Laser tag) on top of cinemas and dining16Better Malls are Evolving convergeShifting merchandise mix and incorporating new elements such as restaurants, entertainment and non-traditional anchorseTailers actively growing a presence with physical stores (Bonobos, Blue Nile, Amazon)Online brands testing bricks and mortar (b8ta, Ministry of Supply, Combatant Gentleman)Channels continue to converge95% of all retail sales are captured by retailers with a bricks and mortar presenceTwo-thirds of customers purchasing online use a physical store before or after the transactionOnline sales are more robust when supported by brick and mortar locations
17. BROADER TRENDSMALL CONVERSATIONSPop up StoresShort term retailersNo longer seasonal or transitoryWay to test concepts & ideasLow riskOnline retailers17
18. Pop Up StoresMALL CONVERSATIONS18
19. Pop Up StoresLouis Vuitton, Tiffany’s Hermes and BMW19
20. EntertainmentMALL CONVERSATIONSMore experientialEntertainment concepts (gyms, carts, golf, skydiving, bowling, escape rooms. Laser tag) on top of cinemas and dining20
21. EntertainmentMALL CONVERSATIONS21
22. Key Figures22Shopping Center Construction spending (by month)Source ICSC
23. Key Figures23Impact of Shopping CentersSource ICSC