October 2005

State of the Shopping Center Industry

The Industry in Connecticut

National Same-Store Sales Sept. 2004-Sept. 2005

2.4%

4.1%

1.8%

2.7%

3.6%

4.7%

4.0%

2.2%

2.8%

5.2%

3.6%3.7%

4.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

S O N D J F M A M J J A S

Source: ICSC

2005 Has Been Solid So FarAverage same-store sales gain of

+3.8% for the fiscal year to date

September’s increase of +4.0% was on trend but concealed unevenness across retailers/categories

Adverse factors were Katrina, energy prices, and lack of “wear now” fashion in extended period of hot weather

Chain-Store Sales YTD 2005 Average Monthly

Growth

1.4%2.0%

3.5%

5.6%6.2%

-6.6%

3.0%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

Apparel

Department

Discounter

Drug

Wholesale

Furniture

Footwear

Source: ICSC

High-end Retailing Continues Strong

6.3%

9.0%

3.7%

2.0%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

Same-store SalesGrowth YTD 2005

Nordstrom

Neiman Marcus

Saks Fifth Ave

All Dept Stores

The Luxury Market

Driven by well-heeled consumer and also by moderate income consumer

Luxury bifurcated into high-end and “accessible”

Examples of “accessible” retailers—Coach, Burberry, Neiman Marcus

Positive Fundamentals

Principal drivers of strong retail and property performance still in place

Despite September up tick due to Katrina, the unemployment rate is still a low 5.1% compared with 5.4% a year ago

1.592 million new jobs year to date

0

500

1000

1500

2000

2500

O N D J F M A M J J A S

Economy has generated 2.161 million jobs in the last

year

Source: Bureau of Labor Statistics

Positive Fundamentals

Positive FundamentalsIncome Growth

Incomes still growing—

Disposable income increased by 5.1% in the second quarter on a year-over-year basis

Employee compensation increased 7.6%

Wages & salaries increased 7.4%

Positive Economic News

Housing market still strongExisting home sales reached an

annualized 7.29 million in August, the second highest on record

Median existing house price in August up 16% year/year to $220,000

New home sales reached a record in July before retreating in August

Specialty Retailer Profit Growth

1Q04-2Q05

36.5%

22.3%

10.9% 10.6% 12.2%

18.6%

0%

5%

10%

15%

20%

25%

30%

35%

40%

1Q04 2Q04 3Q04 4Q04 1Q05 2Q05

New Retailers are Stepping in to Fill the Gaps

Established retail names still in growth mode

Exciting new concepts; e.g. “Ruehl,” “Soma,” “Forth & Towne,” “Jimmy ‘Z” and “One Thousand Steps”

European retail names getting a foothold; e.g. Zara, Mango, Mexx

Mergers & Acquisitions

Sears/Kmart

Federated/May

Belk/Saks

Texas Pacific & Warburg Pincus/Neiman Marcus

Among the Department Store Companies:

New Mall Anchors Stepping Up

Retailers lining up for mall anchor slots; e.g. discounters, sporting goods

Provides an opportunity to tap into markets with no alternative greenfield locations

Offers a growth channel to compensate for increasing difficulties getting permissions in outlying areas

REIT Occupancy (2Q05)

84%

86%

88%

90%

92%

94%

96%Regency

Federal Rlty

Devel. Div

Kimco

New Plan

Macerich

Simon

CBL

PREIT

General Grth

Taubman

Glimcher

Total Returns Privately Owned Property

0%

5%

10%

15%

20%

25%

1 yr 3 yrs 5 yrs

Source: NCREIF

NCREIF Property Index Total Returns(through June 30, 2005)

Index

RetailSubindex

Total ReturnsREITs

0%5%

10%15%20%25%30%35%40%

1 yr 3 yrs 5 yrs

Source: NAREIT

NAREIT Index (through September 30, 2005)

Index

Malls

ShoppingCenters

Katrina’s CostPhysical damage approximately $100

billion

50% of damage to housing, 25% to businesses, 25% to infrastructure

About $25 billion in lost economic activity,

80% of lost output directly in the affected Gulf region, mostly in New Orleans

Gasoline prices averaged $2.85 per gallon October 10Prices 86 cents a gallon higher than a year agoA disproportionately harsh impact on low-income

households, which spend about twice as much on energy as a percent of income as the average U.S. household

Energy Prices are a Big Concern

Middle income households increasingly affected54% of households now reducing discretionary

purchases due to gasoline prices—up from 50% in early July but down slightly from 58% in mid-August

46% of households with incomes over $50,000 are reducing spending, up from 37% in July

Consumers partially offsetting higher gas prices by shopping more “efficiently”—i.e., buying more on each trip

ICSC Survey September 22-25

What Can We Expect for the Rest of 2005?

Katrina will take from 2H05 and give back in 1H06GDP growth of 3.0-4.0% for the second half of 2005Reconstruction will add a half percentage point to

growth in 1H064.0%+ growth in 1H06

And for Retail?

The economic fundamentals are still sound but. . .Increasing stress on household balance sheets from rising

energy costs and debt loads. An especially severe winter will be testing

Consumer will still pay full-price for the right merchandiseICSC Research forecasts second-half non-auto sales

growth of 6.7%, in line with first half 7.0%

Thank You!