rouse properties (nyse:rse) memo - university of …...rouse properties (nyse:rse) memo...

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Rouse Properties (NYSE:RSE) Memo Company Description Rouse Properties, a spin/off from General Growth Properties, is a Real Estates Investment Trust (REIT), which has 33 enclosed shopping malls with over 21.5 million square feet, located in coast to coast in 20 states. Its portfolio consists of well/located assets, with 80% being the only enclosed mall within their markets. The revenue is mainly from leasing the area of the shopping mall to anchor stores, national in/line tenants, local retailers, sit/down restaurants, and movie theaters. Thesis / Key Points ! Rouse Properties’ portfolio has a really strong performance after spinoff as the dominant malls in protected markets: the assets are well located, with 80% being the only enclosed mall within their market as “only game in town” properties. Leased rate increases to 90.7% as of September 30, 2013 from 89.7% as of September 30, 2012(1% increase in occupancy rate represents 3.5 million increases in net operating income) Average in/place rents for mall spaces increase by 1.4%. Rouse not only achieve a substantial increase in the overall leased rate of the portfolio, but also improved their mix of permanent versus temporary leased space. 4% of the temporary occupancy converts to permanent occupancy (1% of temporary to permanent conversion represents 1.5 million incremental NOI) ! Rouse successfully Improve Tenant Mix and shopping experience of the Malls by matching it to the community it serves for internal growth: Rouse merchandising mix of the malls by adding “big/box” tenants including Ulta, TJ Maxx, Dick’s Sporting Goods, and The Sports Authority, entertainment tenants such as Cinemark Theatres, Regal Entertainment Group and AMC theatres and large format tenants such as Costco, Wal/Mart and Kohl’s in order to become more relevant to the community it serves and increase the number and frequency of customers visiting the center. For cosmetic improvement projects, Rouse implemented improvement such as upgraded interior/exterior signage, soft seating, lighting and internet availability to increase the shopping experience. Rouse have already completed, commenced reconfiguration and cosmetic improvement project on over 30% of its portfolio. All the movement shows Rouse objective to match the malls to the consumer shopping patterns and needs and desires of the demographics in a particular market area. ! Rouse Properties expands its portfolio by strategic acquisition of dominant malls in protected markets for external growth: Rouse has acquired more $ 210 million of properties that matched its dominant and protected market criteria, increase the portfolio from 30 malls to 33 malls located in 20 states. The assets Rouse acquired have really limited downside and significant growth opportunities. For example, in 2012, Rouse purchased Grand Traverse Mall in Traverse City, Michigan for $62 million. Serving 22 counties in northern Michigan, Grand Traverse Mall is the only mall within 100 miles. Grand Traverse Mall not only serves the counties around, but also serves 5 million tourists annually as the largest shopping center in Northern Michigan. By applying Rouse’s platform and professional in improving retailer quality and occupancy rate, and sale per square foot. For financial perspective, Rouse’s liquidity, in approximately $300 million, allows Rouse to acquire more shopping mall that matched its criteria. ! Rouse Property has a nationally diversified portfolio with good reputation and solid relationship with tenants: Rouse has a nationally diversified mall portfolio totaling over 22 million square feet and have 33 malls located in 20 states. Rouse operation are national in scope and have relationship with a wide range of tenants include anchor stores, in/line tenant, local retailer, sit/down restaurants, movie theaters, national in/line tenants and local retailers. The relationship with the tenants are really valuable because it is easier to make agreement and can bring the tenants in one shopping center to other shopping centers in its portfolio. For example, Rouse recently executed leases for 18 Nestle Toll House cafes to anchor center courts, which shows its scope to increase its occupancy level. Furthermore, anchor tenants usually sign 15/ to 20/year leases, which provide a strong base for tenant retention. Misperception ! All the shopping malls in Rouse Properties’ portfolio are class B malls, which are inferior to class A malls and will fail in the future because they are bad malls. The difference of Class A mall and class B mall is their annual sales per square foot. Class A malls have annual sales of $500 to $750 per square foot, while class B malls have annual sales of $250 to $500 per square foot. However, it doesn’t mean that class B malls are bad mall. Class A malls and class B mall targets different quantity of customers and different income level of the customer groups. Class A mall is usually the largest mall in the center of the city, serves larger quantity of customers and tend toward luxury goods for upper/class customer. Class B malls is normally large regional mall and serves middle or upper middle/income demographic. The class B malls in Rouse Properties portfolio are largest mall in their town, but the town may not be the biggest town in the world. Stable community and the center position in the communities with little players make the mall dominated in the area. Besides, tenants Name: Mark Sun Phone #: 434J466J2033 College/School: CLAS Year: 2016

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Page 1: Rouse Properties (NYSE:RSE) Memo - University of …...Rouse Properties (NYSE:RSE) Memo are&increasingly&focus&on&entering&class&B&malls&as&increasing&occupancy&cost&of&Class&A&malls&and&lack&of&new&

Rouse Properties (NYSE:RSE) Memo

Company(Description(Rouse&Properties,&a&spin/off&from&General&Growth&Properties,&is&a&Real&Estates&Investment&Trust&(REIT),&which&has&33&enclosed&shopping&malls&with&over&21.5&million&square&feet,&located&in&coast&to&coast&in&20&states.&Its&portfolio&consists&of&well/located&assets,&with&80%&being&the&only&enclosed&mall&within&their&markets.&The&revenue&is&mainly&from&leasing&the&area&of&the&shopping&mall&to&anchor&stores,&national&in/line&tenants,&local&retailers,&sit/down&restaurants,&and&movie&theaters.&&&&&Thesis(/(Key(Points(

! Rouse( Properties’( portfolio( has( a( really( strong( performance( after( spinoff( as( the( dominant( malls( in( protected(markets:& the&assets&are&well& located,&with&80%&being& the&only&enclosed&mall&within& their&market&as&“only&game& in&town”&properties.&Leased&rate&increases&to&90.7%&as&of&September&30,&2013&from&89.7%&as&of&September&30,&2012(1%&increase&in&occupancy&rate&represents&3.5&million&increases&in&net&operating&income)&Average&in/place&rents&for&mall&spaces&increase&by&1.4%.&Rouse&not&only&achieve&a&substantial&increase&in&the&overall&leased&rate&of&the&portfolio,&but&also&improved&their&mix&of&permanent&versus&temporary&leased&space.&4%&of&the&temporary&occupancy&converts&to&permanent&occupancy&(1%&of&temporary&to&permanent&conversion&represents&1.5&million&incremental&NOI)&

&! Rouse(successfully(Improve(Tenant(Mix(and(shopping(experience(of(the(Malls(by(matching(it(to(the(community(it(

serves( for( internal( growth:& Rouse&merchandising&mix& of& the&malls& by& adding& “big/box”& tenants& including&Ulta,& TJ&Maxx,& Dick’s& Sporting& Goods,& and& The& Sports& Authority,& entertainment& tenants& such& as& Cinemark& Theatres,& Regal&Entertainment&Group&and&AMC&theatres&and& large&format&tenants&such&as&Costco,&Wal/Mart&and&Kohl’s& in&order&to&become&more&relevant&to&the&community&it&serves&and&increase&the&number&and&frequency&of&customers&visiting&the&center.& & For&cosmetic& improvement&projects,&Rouse& implemented& improvement& such&as&upgraded& interior/exterior&signage,& soft& seating,& lighting& and& internet& availability& to& increase& the& shopping& experience.& Rouse& have& already&completed,& commenced& reconfiguration& and& cosmetic& improvement& project& on& over& 30%& of& its& portfolio.& & All& the&movement&shows&Rouse&objective&to&match&the&malls&to&the&consumer&shopping&patterns&and&needs&and&desires&of&the&demographics&in&a&particular&market&area.&&

! Rouse(Properties(expands(its(portfolio(by(strategic(acquisition(of(dominant(malls(in(protected(markets(for(external(growth:& & Rouse& has& acquired&more& $& 210&million& of& properties& that&matched& its& dominant& and& protected&market&criteria,&increase&the&portfolio&from&30&malls&to&33&malls&located&in&20&states.&The&assets&Rouse&acquired&have&really&limited&downside&and&significant&growth&opportunities.&For&example,&in&2012,&Rouse&purchased&Grand&Traverse&Mall&in&Traverse&City,&Michigan&for&$62&million.&Serving&22&counties&in&northern&Michigan,&Grand&Traverse&Mall&is&the&only&mall&within&100&miles.&Grand&Traverse&Mall&not&only& serves& the&counties&around,&but&also& serves&5&million& tourists&annually& as& the& largest& shopping& center& in& Northern&Michigan.& By& applying& Rouse’s& platform& and& professional& in&improving&retailer&quality&and&occupancy&rate,&and&sale&per&square&foot.&&For&financial&perspective,&Rouse’s&liquidity,&in&approximately&$300&million,&allows&Rouse&to&acquire&more&shopping&mall&that&matched&its&criteria.&

! Rouse( Property( has( a( nationally( diversified( portfolio(with( good( reputation( and( solid( relationship(with( tenants:&Rouse&has&a&nationally&diversified&mall&portfolio&totaling&over&22&million&square&feet&and&have&33&malls&located&in&20&states.& Rouse& operation& are& national& in& scope& and& have& relationship&with& a&wide& range& of& tenants& include& anchor&stores,&in/line&tenant,&local&retailer,&sit/down&restaurants,&movie&theaters,&national&in/line&tenants&and&local&retailers.&The& relationship& with& the& tenants& are& really& valuable& because& it& is& easier& to& make& agreement& and& can& bring& the&tenants& in& one& shopping& center& to& other& shopping& centers& in& its& portfolio.& For& example,& Rouse& recently& executed&leases&for&18&Nestle&Toll&House&cafes&to&anchor&center&courts,&which&shows&its&scope&to&increase&its&occupancy&level.&Furthermore,&anchor&tenants&usually&sign&15/&to&20/year&leases,&which&provide&a&strong&base&for&tenant&retention.&&&

Misperception&! All&the&shopping&malls&in&Rouse&Properties’&portfolio&are&class&B&malls,&which&are&inferior&to&class&A&malls&and&will&fail&

in&the&future&because&they&are&bad&malls.&&The&difference&of&Class&A&mall&and&class&B&mall&is&their&annual&sales&per&square&foot.&Class&A&malls&have&annual&sales&of&$500& to&$750&per&square& foot,&while&class&B&malls&have&annual& sales&of&$250& to&$500&per&square& foot.&However,& it&doesn’t&mean&that&class&B&malls&are&bad&mall.&Class&A&malls&and&class&B&mall&targets&different&quantity&of&customers&and&different&income&level&of&the&customer&groups.&Class&A&mall& is&usually&the&largest&mall& in&the&center&of&the&city,&serves&larger&quantity&of&customers&and&tend&toward&luxury&goods&for&upper/class&customer.&Class&B&malls&is&normally&large&regional&mall&and&serves&middle&or&upper&middle/income&demographic.& &The&class&B&malls&in&Rouse&Properties&portfolio&are&largest&mall& in&their&town,&but&the&town&may&not&be&the&biggest&town&in&the&world.&Stable&community&and&the&center&position&in&the&communities&with&little&players&make&the&mall&dominated&in&the&area.&Besides,&tenants&

Name:(Mark(Sun( Phone(#:(434J466J2033( College/School:(CLAS( Year:(2016(

Page 2: Rouse Properties (NYSE:RSE) Memo - University of …...Rouse Properties (NYSE:RSE) Memo are&increasingly&focus&on&entering&class&B&malls&as&increasing&occupancy&cost&of&Class&A&malls&and&lack&of&new&

Rouse Properties (NYSE:RSE) Memo are& increasingly& focus& on& entering& class& B& malls& as& increasing& occupancy& cost& of& Class& A& malls& and& lack& of& new&construction,& because& class& B& malls& have& more& affordable& minimum& rent& and& may& generate& even& more& profit&margins.&So&the&class&B&malls&still&have&their&positions&in&the&market.&

! Rouse&Properties&is&the&spinoff&from&other&company,&which&implies&they&are&bad&malls&that&parent&company&tried&to&get&out&off.&&Rouse&Properties&is&the&spinoff&from&General&Growth&Properties,&second&largest&shopping&mall&owner&in&US.&Prior&to&the&spin/off,&Rouse&Properties’&assets&represented&only&7%&of&General&Growth’s&net&operating&income&and&suffered&from&a&lack&of&capital&investment,&focus&and&attention.&&The&spinoff&is&a&way&for&general&growth&to&focus&its&resources&on& it& best& performing& class& A&malls& and& Rouse& Properties&will& concentrate& on& operating& the& 30& class& B&malls& and&making&new&acquisitions.&This&movement&will&bring&focus&and&resource&to&these&30&Class&B&malls&in&Rouse&Properties&Portfolio,&which&shows&on&their&increase&of&occupation&rate&and&permeate&leased&rate.&&The&malls&in&Rouse&properties’&portfolio&are&in&a&really&similar&position&and&size&in&the&market.&It&will&make&Rouse&Properties&specialized&in&organizing&Class& B&malls& and& further& improve& the& internal& growth& of& the& portfolio.& The& 3& acquisitions& after& the& spinoff& show&Rouse&Properties&movement&of&looking&for&external&growth.&&&&&&

&VAR(

! 1.Personal&contact&Joseph(Gyourko(Chairperson,&Real&Estate&Department,&the&Wharton&School&of&the&University&of&Pennsylvania&and&Director,&Samuel&Zell&and&Robert&Lurie&Real&Estate&Center&[email protected]&&&

Class(B(malls(definitely(are(more(risky,&as&we&are&beginning&to&see&some&of&them&fail.&&And,&there&is&no&obvious&alternative&use&for&failed&malls,&so&their&values&can&fall&very&low&if&they&fail.&&That&said,(there(clearly(will(be(markets(and(cases(in(which(you(do(not(need(a(Class(A(mall(to(be(successful.&

&Professor(Katkish(Executive&in&Residence,&Professor&of&Finance&and&real&estate&in&Kogod&School&of&Business,&American&University&and&the&Founder&and&President&of&the&asset&management&firm&First&Management&Group&Inc.&(202)/966/7668&&&

Rouse(Properties(have(a(really(good(reputation(in(the(REIT(market.&The&Mall&in&Columbia,&MD&is&a&big&thing&when&they&were&built.&The&most&important&factor&for&the&success&of&a&mall&is&right&response&to&the&market.&When&I&was&in&the&equity&fund,&I&don’t&really&look&at&whether&they&are&class&A&or&Class&B&malls,&what&I&was&looking&for&is&whether&the&malls&correctly&response&to&the&market&demands.(Rouse(know(how(to(hire(the(right(people&and&couple&of&my&friends&are&working&in&Rouse&Properties.&The&parking&is&another&crucial&parts&of&the&success&of&a&shopping&mall,&especially&during&holiday,&if&customers&cannot&find&parking&space,&90%&of&them&will&choose&to&leave.&But(Rouse(has(been(in(this(market(for(a(really(long(time,(they(have(enough(knowledge(to(handle(it.(Their(malls(are(classic(and(build(in(a(really(good(location.(Online&retailer&definitely&is&a&big&competitor&of&the&shopping&malls,&because&the&shopping&malls&are&expensive&to&build,&but&online&retailers&like&amazon&don’t&need&to&invest&in&that.&The&sales&are&also&highly&depending&on&the&market&situation.&In&the&recession,&some&of&the&REIT&even&gives&free&rent&to&the&anchors&and&major&in/line&shop,&because&they&cannot&lose&this&major&traffic.&This(year(is(a(good(year(for(Rouse(Properties(and(they(starts(to(recover(from(the(recession.(From(my(projection,(retail(shopping(malls(will(still(have(its(important(position(in(the(following(10J20(years(and(I(am(really(positive(about(the(performance(of(Rouse(Properties(based(on(its(historical(performance.&

Sam(Wald(Portfolio&manager&with&Fidelity&Investments.&&&

Investing(in(class(B(mall(operators(is(a(wise(choice:&I&feel&class&B&mall&operators&are&very&inexpensive&right&now&relative&to&the&other&retail&retailers&and&to&the&broader&REIT&universe;&The(markets(are(currently(underestimating(the(future(growth(of(class(B(mall(operators.(&

Teri(Schaller(General&manager&of&Colony&Square&Mall,&OH&&&Interview&in&the&Mall&

“Colony&Square&Mall&is&the&only&enclosed&regional&shopping&mall&in&30/miles&radius&and&we&have&been&serving&the&local&people&for&30&years.&We&have&a&Cinemark&cinema&and&place&for&kids&to&play.&This&mall&becomes&a&great&place&for&local&people.&This(year(Dunham’s(Sports(move(into(the(65,000(square(foot(space(formerly(occupied(by(Sears.(This(change(provides(a(wider(product(selection(for(the(customers(and(enhance(the(shopping(experience(of(the(customers((“(&

&&&

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Rouse Properties (NYSE:RSE) Memo &&

! Case&study&(see&the&appendix)&&! DCF&(see&the&appendix)&

&&&&&&&&&&How(It(Plays(Out(

! Rouse&continue& increase&of&the&occupancy&and& leased&rate&and&more&temporary&occupancy&converts&to&permanent&occupancy,&which&brings&to&further&growth&of&revenue,&net&operating&income&and&fund&from&operation.&&

! Rouse&uses& its&300&million& liquidity& to&make&more&acquisitions&of& the&shopping&mall& that& is& the&dominant&shopping&mall&in&protected&market.&&&

! Lower&rate&of&unemployment&and&increase&of&the&income&level&of&middle&class&and&upper&class&will&increase&the&sales&of&the&goods&in&the&shopping&mall.&

! Consumers&enjoy&the&shopping&experience&in&Rouse’s&shopping&malls,&so&they&go&to&the&mall&more&frequency&and&stay&there&for&a&longer&duration,&which&bring&more&sales&to&the&mall.&&

&Risks(/(What(Signs(Would(Indicate(We(Are(Wrong?(

! The&company’s&ability&to&maintain&its&status&as&a&REIT:&If&the&company&loses&its&status&as&a&REIT,&it&will&not&have&the&tax&reduction,&which&will&influence&the&net&income&of&this&company.&But&from&my&research,&the&company&will&hold&their&REIT&status&unless&something&extreme&happened,&such&as&environmental&problems,&terrorist&attack.&&

! The& competition& from&online& retailers& such& like&amazon:& It& is& undeniable& that&online& retailers& take&a& lot&of&market&share& from& the& retail& shopping&mall,& because& they& can&avoid& sale& tax& and& the& cost&of&building&expensive& shopping&mall.&It&will&still&big&a&risk&for&Rouse&Properties&in&the&future.&However,&the&retail&shopping&malls&of&Rouse&will&still&have&its&position& in& the&market,&because& from&my&survey& in&Colony&Square&Mall,&buying&goods& in& shopping&mall& is&more&reliable&and&people&also&go&to&shopping&malls&for&entertainment&purposes,&to&meet&friends&and&eat.&&

! Close& of& the& anchors:& Once& one& or& more& anchors& close,& it& sets& off& a& chain& reaction& of& reduced& shopping& traffic,&increased& financial&pressure&on&smaller& in/line&stores&and&decreased&revenue& for&maintenance&and&operations& that&can&quickly&send&a&mall& in&to&death.& &Rouse&did&a&really&good&job&in&finding&new&anchors&to&fill&the&gap&from&closing&anchors.&For&example,&Sears&vacated&two&boxes&upon&lease&expiration& in&early&2013:&with&60&days,&Rouse&re/leased&both& boxes& to& higher,&more&market& relevant& retailers.& I& went& to& Colony& Square&Mall,& Zanesville,& OH& to& check& the&condition&of&the&new&re/leased&anchor.&The&released&the&Sears’s&box&to&Dunham’s&sporting&goods& in&Colony&Square&Mall,&which& is& the&only& full/line& sporting& goods& retailer& in& the& trade& area,& capitalizing&on&outdoor& and& recreational&focus&of&market.&The&transaction&was&executed&at&multiples&of&prior&rent&and&has&generated&strong&returns&on&capital&deployed.&&This&action&shows&management&team’s&fast&reaction&to&the&problems&of&this&company.&&

! Financing&debt:&As&a&REIT,&Rouse&holds&a&lot&of&debt,&which&may&bring&the&company&to&bankrupt&if&the&company&can&not& pay& for& their& debt.& The& total& debt& of& Rouse& is& 1170&million,& with& 20.6& million& for& the& year& ending& 2013& and&approximately& $192.2&million& for& the& year& ending& 2014.& I& feel& confident& that& Rouse&will& not& have& any& problem& to&finance& their& debt.& The& company& currently& has& sufficient& liquidity& to& satisfy& all& of& our& commitment& in& the& form&of&$603.5&million&of&consolidated&unrestricted&cash and $945.0 million of available credit under our credit facility as of September 30, 2013, as well as anticipated cash provided by operations. Besides,&Rouse&has&done&really&good&to&close&their& debt.& Rouse& has& closed& $451& million& of& new& mortgage& since& formation& and& generated& net& proceeds& of&approximately&$78&million.&This&enabled&Rouse& to& reduce& its&outstanding& recourse&debt&by&over&33%,& increase&our&weighted&average&maturity&date&to&3.7&years&from&2.9&years&and&reduce&our&weighted&average&interest&rate&to&5.19%&from&5.55%�

&Signposts(/(FollowJUp(

! Growth:& Occupation& rate,& lease& rate,& revenue,&net&operating&income&&&

! Finances:&debt&level,&free&cash&flow,&liquidity,&&&! Acquisition:& Assess& the& new& acquisitions& to&

check&whether&they&have& limited&downside&and&significant&growth&opportunities.&&&&

! Demography:& the& unemployment& rate& and&income&level&of&the&mid/class&and&upper/class&&&

&

Important(Company(Financial(Data(Price&(30/11/13):&&$24.39&&&&&&&&&&&&&&&&&52&week&range:&$14.86/24.77&&Market&Capitalization:&1.2B&&&&&&&&&&&&&P/E:&N/A&2012&Revenue:&233.9M&&&&&&&&&&&&&&&&&&&&EPS:&/0.8&

&&&&

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Rouse Properties (NYSE:RSE) Memo &VAR:&case&study:&Colony&Square&Mall& Colony&Square&Mall&(3575&Maple&Avenue&Zanesville&OH&43701)&I&went&to&the&Colony&Square&Mall&on&Sunday&Dec&1.&I&did&an&in/store&survey&and&interviewed&the&lease&manager&of&the&store.&Colony&Square&is&the&only&enclosed&shopping&Mall&in&30&miles&radius&and&severs&240,000&people&in&seven&county&areas&and&is&the&retail&core&for&southeastern&Ohio.&&&

Parking:&&Plenty&of&space&for&parking,&which&also&conforms&the&statement&of&Professor&Katkish:&The&parking&is&another&crucial&parts&of&the&success&of&a&shopping&mall,&especially&during&holiday,&if&customers&cannot&find&parking&space,&90%&of&them&will&choose&to&leave.&But&Rouse&has&been&in&this&market&for&a&really&long&time,&they&have&enough&knowledge&to&handle&it.&&&&

Anchors:&JCpenny,&Dunham’s&Sports,&and&Elder/Beerman.&&From&the&results&of&my&in/store,&Anchor&store&is&one&of&the&main&reason&people&go&to&Colony&Square&Mall&which&bring&more&traffic&and&have&the&chain&effects&to&other&tenants&in&the&shop.&Dunham’s&Sports&adds&more&diversified&good&selection&to&the&mall,&which&will&drive&more&customer&to&come.&&&

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Rouse Properties (NYSE:RSE) Memo In/line&tenant:&American&Eagle&Outfitters,&Victoria's&Secret,&Foot&Locker,&f.y.e&

Food&court&will&extend&customers&duration&of&shopping&in&the&mal&

• Entertainment:&Cinemark,&Perry's&Glo&Putt.&Entertainment&will&

definitely&increase&the&number&and&frequency&of&customers&visiting&

the&center.&&

Free&WIFI&covers&every&corner&of&the&mall,&which&will&extend&customers&duration&of&shopping&in&the&mall.&&

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Rouse Properties (NYSE:RSE) Memo Economic&Growth&With&the&discovery&of&vast&oil&and&gas&reserves&in&the&area’s&Utica&shale,&Colony&Square&Mall&is&positioned&to&reap&the&benefits&of&a&major&uptick&to&the&local&economy.&The&increase&of&the&income&level&of&the&residence&there,&will&definitely&boost&the&sale&in&the&shopping&Mall&

DCF

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NewcomerstownNewcomerstownNewcomerstownNewcomerstownNewcomerstownNewcomerstownNewcomerstownNewcomerstownNewcomerstownCoshoctonCoshoctonCoshoctonCoshoctonCoshoctonCoshoctonCoshoctonCoshoctonCoshocton

New ConcordNew ConcordNew ConcordNew ConcordNew ConcordNew ConcordNew ConcordNew ConcordNew ConcordNorth ZanesvilleNorth ZanesvilleNorth ZanesvilleNorth ZanesvilleNorth ZanesvilleNorth ZanesvilleNorth ZanesvilleNorth ZanesvilleNorth Zanesville

LoganLoganLoganLoganLoganLoganLoganLoganLogan

UticaUticaUticaUticaUticaUticaUticaUticaUtica

Mount VernonMount VernonMount VernonMount VernonMount VernonMount VernonMount VernonMount VernonMount Vernon

McConnelsvilleMcConnelsvilleMcConnelsvilleMcConnelsvilleMcConnelsvilleMcConnelsvilleMcConnelsvilleMcConnelsvilleMcConnelsville

PhiloPhiloPhiloPhiloPhiloPhiloPhiloPhiloPhilo

CrooksvilleCrooksvilleCrooksvilleCrooksvilleCrooksvilleCrooksvilleCrooksvilleCrooksvilleCrooksville

ShawneeShawneeShawneeShawneeShawneeShawneeShawneeShawneeShawnee

LancasterLancasterLancasterLancasterLancasterLancasterLancasterLancasterLancaster

Harbor HillsHarbor HillsHarbor HillsHarbor HillsHarbor HillsHarbor HillsHarbor HillsHarbor HillsHarbor Hills

PataskalaPataskalaPataskalaPataskalaPataskalaPataskalaPataskalaPataskalaPataskala HeathHeathHeathHeathHeathHeathHeathHeathHeath

DresdenDresdenDresdenDresdenDresdenDresdenDresdenDresdenDresden

CambridgeCambridgeCambridgeCambridgeCambridgeCambridgeCambridgeCambridgeCambridge

ZanesvilleZanesvilleZanesvilleZanesvilleZanesvilleZanesvilleZanesvilleZanesvilleZanesville

NewarkNewarkNewarkNewarkNewarkNewarkNewarkNewarkNewark

NEW TOWNE MALLNEW TOWNE MALLNEW TOWNE MALLNEW TOWNE MALLNEW TOWNE MALLNEW TOWNE MALLNEW TOWNE MALLNEW TOWNE MALLNEW TOWNE MALL

INDIAN MOUND MALLINDIAN MOUND MALLINDIAN MOUND MALLINDIAN MOUND MALLINDIAN MOUND MALLINDIAN MOUND MALLINDIAN MOUND MALLINDIAN MOUND MALLINDIAN MOUND MALL

RIVER VALLEY MALLRIVER VALLEY MALLRIVER VALLEY MALLRIVER VALLEY MALLRIVER VALLEY MALLRIVER VALLEY MALLRIVER VALLEY MALLRIVER VALLEY MALLRIVER VALLEY MALL

22

33

22

22

22

22

22

40

22

250

33

62

36

36

36

36

62

4040

62

250

36

22

77

145

164

16

158

146

345

13

145

147

164

37

149

331

16

206

541

60

158

158

159

621

39

416

145

26

146

209

258

265

266

37

377

13

146

16

345

13

13

314

161

586

60

93

145

146

180

216

668

Average Household IncomeColony Square Mall

Zanesville, OH

Data Source: The Nielsen Company March, 2013Data Source: The Nielsen Company March, 2013Data Source: The Nielsen Company March, 2013Data Source: The Nielsen Company March, 2013Data Source: The Nielsen Company March, 2013Data Source: The Nielsen Company March, 2013Data Source: The Nielsen Company March, 2013Data Source: The Nielsen Company March, 2013Data Source: The Nielsen Company March, 2013

2013 Average HH Income

Below $40,000$40,000 to $50,000$50,000 to $60,000$60,000 to $70,000$70,000 and Above

lllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllColony Square Mall

Major Shopping Center

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Lifestyle Shopping Center

((((((((((((((((((((((((((((((((((((((((((((((((( Outlet Shopping Center

Trade Area Boundary

5 MILES

0 4 8

miles

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Rouse Properties (NYSE:RSE) Memo

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Rouse Properties (NYSE:RSE) Memo Colony Square Mall Marketing Research Survey

1. How far do you live from this mall?

A. Within 5 miles

B. Within 30 miles

C. Within 50 miles

D. More than 50 miles away

2. Who are you with?

A. Just myself

B. My friends

C. My boyfriend/girlfriend

D. My family

Other (please specify) 3. How often do you shop at Colony Square Mall?

A. This is my first time.

B. More than one time per month

C. One time per month

D. Once per quarter

Other (please specify) 4. Why do you choose to go to Colony Square Mall? (Multiple answers)

A. It is closer to my home and it is really convenient to go

B. I can find good deals here

C. It has the stores I want to go

D. It is a good place to hang out E. Cinema or food court

5. Which stores or places are you planning to go to?

A. Anchors (Dunham’s Sports, JCpenney, Elder-Beerman)

B. In-line tenants

C. Kiosks

D. Cinema

E. Food court Please specify the in-line tenants you want to go &&& &

I did 25 surveys in the Colony Square Mall The result from the survey shows that the mall is mainly serves the people live within the 30 miles (15 people within 5miles, 8 people within 30 miles, 2 people are visitors living more than 50 miles away.

The mall is a great family place, 18 people came with Their family and 7 people are friends.

Most of the people come here pretty often: more than 50% of people come here around one time per month.

People come here mainly because the mall has the stores they want to go and it is a good place to hang out.

Anchors is the main traffic driver: 19 people come to the mall for the goods in the Anchors