Beverly Center Investor Events1.q4cdn.com/799408505/files/doc_presentations/2019/...Beverly Center - Investor Event– January 16, 2019 3 Taubman Team William S. Taubman is chief operating

Beverly Center Investor EventJanuary 16, 2019

Beverly Center - Investor Event– January 16, 2019 2

Evening’s Schedule

Time Subject Company Representatives5:00 – 5:15 Welcome

5:15 – 6:00 Company Presentation William Taubman

6:00 – 6:45 Center Tour & Q&A William Taubman, Simon Leopold, Scottie Lee & Ralph Barnes

6:45 – 8:15 Cocktails & Dinner – Cal Mare

William Taubman, Simon Leopold, Scottie Lee & Ralph Barnes

~ 8:30 Bus Drop-Off at Beverly Wilshire


Taubman Team

William S. Taubman is chief operating officer of Taubman Centers, Inc. He is responsible for development, operations and leasing.

Mr. Taubman joined the company in 1986 from Oppenheimer & Co., Inc. in New York, where he was a financial analyst specializing in mergers and acquisitions. He is a graduate of Brown University where he received a bachelor's degree in Religious Studies, Philosophy and Russian Studies. He also holds a master's degree in Philosophy from Corpus Christi College of Cambridge University, Cambridge, England.

Mr. Taubman is a member of the Urban Land Institute (ULI) and the National Association of Real Estate Investment Trusts (NAREIT). He is immediate past Chairman and Chair of the Development Committee for the racial justice organization New Detroit. He also serves on the Board of Governors for the Museum of Arts & Design in New York, and is past Chairman of International Council of Shopping Centers (ICSC).

William S. TaubmanChief Operating Officer

As Taubman’s chief financial officer and treasurer, Simon J. Leopold has senior responsibility for the company’s financial functions. He also is a member of the company’s Operating Committee. Simon joined Taubman in 2012 as treasurer and executive vice president, capital markets. He assumed the responsibilities of chief financial officer in 2016.

Previously, he served as managing director in the real estate investment banking groups at Deutsche Bank, KBW and UBS. Earlier in his career, Mr. Leopold worked in New York City government in a variety of urban planning and economic development positions in the Office of the Mayor, Department of City Planning and the city’s Economic Development Corporation.

Simon is a member of the National Association of Real Estate Investment Trusts (NAREIT), the International Council of Shopping Centers (ICSC), and the Urban Land Institute (ULI). He holds an undergraduate degree from the University of Michigan and an MBA from Yale University’s School of Management.

Simon J. LeopoldExecutive Vice President, Chief Financial Officer


Taubman Team

Scottie Lee Vice President, Strategy & Research

As the general manager of Beverly Center, Ralph Barnes is responsible for overseeing all functions related to the daily operations including retailer and community relations, marketing and sponsorship, as well as continuing to play a key role in high-profile, luxury leasing initiatives for Southern California’s premier fashion destination.

Ralph has over fifteen years in commercial property management and development. Since joining the center in 2008 Barnes had served as director of facilities and then as director of operations before taking on the role as general manager in 2013. Barnes currently serves as a Board member for the Los Angeles Chamber of Commerce, the West Hollywood Chamber of Commerce, the West Hollywood Travel & Tourism, and CAUSEUSA.

Ralph BarnesGeneral Manager, Beverly Center

In his role at Taubman, Mr. Lee is responsible for the Corporate Strategy, Research, Financial Planning & Analysis, and Financial Analytics functions for the Company. He is a member of the Company’s Core Leadership Team. He joined Taubman in 2007. Prior to Taubman, Mr. Lee was a management consultant at FTI Consulting/Helios Consulting (corporate strategy) and Vantage Point Consultants (legal) after working in the trading industry at Island Creek Capital and Alpart Trading.

Mr. Lee is a member of the International Council of Shopping Centers, including its North American Research Task Force, and the Urban Land Institute (ULI). He was a member of the inaugural class of ULI Michigan’s Larson Center for Leadership in 2012 and named to the 2015 class of “30 in Their Thirties” by dbusiness, Detroit’s Premier Business Journal. He holds an MBA with High Distinction from the University of Michigan’s Ross School of Business and a BS in Industrial Engineering & Management Sciences and Economics from Northwestern University.

Introduction to Beverly Center


Beverly Center – 1982

• Opening in 1982, Beverly Center was developed by Sheldon Gordon, E. Phillip Lyon and A. Alfred Taubman on the site of a small amusement park called “Kiddieland”, an inspiration for Walt Disney’s “Disneyland” theme park

• For the next 20+ years Beverly Center was recognized as the dominant retail asset in West L.A. and thrived as the surrounding community prospered


Beverly Center – 1982 - 2015

• Throughout the 1980’s and into the 2000’s Beverly Center was regarded as one of the top 10 regional mall assets in the country

Beverly Center opened with Bullock’s and Broadway as department store anchors

In 1996, Bullock’s department store became a Macy’s store and Broadway was converted into a Bloomingdale’s location

The renown escalators were inspired by those in the Pompidou Centre in Paris

The first Hard Rock Café in the country opened with the center in 1982, averaging ~$9 million in annual sales over the next 15 years

8Beverly Center - Investor Event– January 16, 2019

Beverly Center - Location

Source: City of Los Angeles Department of Transportation, Google Earth, Tetrad Sitewise• Beverly Center is located at the point where the affluent communities of Hollywood, West Hollywood, Los Angeles and Beverly Hills come together, creating an urban retail community with a trade area of nearly 4 million people, as well as significant tourism


Brief Market History

● Beverly Center was regarded as one of the top 10 regional mall assets in the country from its opening in 1982 through the early 2000’s

● Exclusive fashion-forward brands and unique entertainment concepts served as the foundation of the center’s merchandise mix

● Beverly Center underwent targeted renovations in 1994, following the Northridge earthquake, and in 2000 where several aspects of the center were updated

● The opening of The Grove with Nordstrom in 2002, the expansion of Century City with a flagship Bloomingdale’s in the same period, and improved merchandising on the surrounding street retail (Melrose & Robertson) put competitive pressure on the center

● In 2014, Westfield Century City began construction on its major redevelopment and expansion

● In March 2016, Taubman announced the comprehensive reimagination of Beverly Center, with a goal of maintaining and improving the center’s position in the market, while increasing the asset’s long-term viability in the face of new, expanded and rejuvenated competition

Investment Decision


Investment Planning & Research – Understand Your Customer

MARKET RESEARCH PLANNING & DESIGNStudio Fuksas● Chosen after winning an

architectural competition conducted by Taubman, program was influenced by the Kelton research

● Fuksas’ projects include– Shenzhen Bao'an

International Airport– Ferrari Headquarters and

Research Center – New National Archives of

France– MyZeil Shopping Mall

(Frankfurt, Germany)

MERCHANDISINGRon Frasch & Robert Burke Associates● Engaged to help curate a

merchandise mix that would create a modern, three-dimensional shopping experience

● Instrumental in helping form our vision for the ground level of the center, which features a collection of restaurants featuring award-winning chefs across cuisines, formats and price points that are unique for a regional mall

Kelton● Engaged to better understand

the shopping habits of Angelenos and the key drivers in their shopping preferences

● Employed a number of research techniques – Focus groups – Ethnography – Online forums– Surveys – Conjoint analyses

● Provided a comprehensive view of Beverly’s existing positioning within L.A., strengths, weaknesses & opportunities to increase market share, which helped form a baseline for our decision-making process going forward


● Atmosphere/Outdoor Feel● Parking & Navigation● Sit-down Restaurants● Fast-Casual Food● Anchor Store Redesign● Connect Center to Surrounding Neighborhood

Strengths & Strategic Improvements

Existing Strengths Areas of Strategic Improvement

● Only Location with High, Medium and Low Price Points

● Strong Tourism Business● Comprehensive Store Selection (including luxury)● Best Fast Fashion● Power Shopping (quick trips to get a few things)

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Sales ProductivityDeceleration from

Peak Levels


Contemporize the Interior & Exterior

◼ Add a new exterior perforated steel façade that captures light during all parts of the day

◼ Reenergize the center with sun-lit space that blurs the lines between inside and outside

◼ Add a programmable exterior LED lighting system, which allows the color of the center to coordinate with local events, similar to the Empire State Building

Open the Center Up to the Surrounding Neighborhood

◼ New streetscape that combines modern architecture and drought-resistant greenery for a pleasant walking experience

◼ Add a row of street-level restaurants that open the center to the vibrancy of West Third Street and embrace a pedestrian-oriented environment

Dramatically Upgrade the Collection of Food

◼ Transform lower-productivity, large-format spaces into vibrant chef-driven restaurants that draw traffic to the center from the surrounding neighborhood

◼ Upgrade food offerings, including fast-casual restaurants, that offer our shoppers a variety of tastes, prices and experiences

Improve the Arrival, Parking and Departure Experience

◼ A new, state-of-the-art smart parking system now guides visitors through the 3,000-space parking garage

◼ Add a valet off West Third Street to provide quick access to the street-level restaurants and retail

Elevate the Merchandising

◼ Expand luxury footprint

◼ Revamp the merchandise plan and identify relevant brands for each lifestyle and price point

◼ Add key flagship retailers to complete a collection of tenants that does not exist elsewhere in the market, and is very difficult to replicate

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Full Scale Renovation – Identified Five Transformational Goals

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Investment Goals


Goal #1: Contemporize the Exterior & InteriorBefore: 3rd Street & La Cienega

After: Exterior – Beverly Blvd. & La Cienaga After: 3rd Street & La Cienega

Before: Exterior – Beverly Blvd. & La Cienaga


Goal #1: Contemporize the Exterior & Interior

Before: Floor Openings & Skylight


Goal #1: Contemporize the Exterior & Interior

After: Floor Openings & Skylight


Goal #1: Contemporize the Exterior & InteriorBefore: Concourse – Level 7 Before: Grand Court

After: Concourse – Level 7 After: Grand Court


Goal #2: Open the Center Up to Surrounding Neighborhood

Arrival Experience Improvements• Streetscape Enhancements• Clearly Identified Entries• Third Street Valet Entry/Exit• New Restaurant Valet• Express Elevator to Roof Terrace

Before:

After:


Goal #2: Open the Center Up to Surrounding Neighborhood

• Transformed Bed Bath & Beyond and Grand Lux Cafe into an enviable line-up of five chef-driven full-service restaurants and four unique fast casual concepts on the street level to better connect to the vibrancy of West Third Street

• The four fast casual restaurants should draw from Cedars-Sinai Hospital (est. 20,000 employees and visitors per day)

• VIP Room added to service our stylist community, celebrities, entertainment industry professionals and influencers

New Third Street Valet

Chef-Driven Full Service RestaurantsUnique Fast Casual Dining

Cedars-Sinai Pedestrian Connection

New VIP RoomImproved La Cienega Blvd. Entrance

Concept by


Goal #3: Dramatically Upgrade the Collection of Food

Restauranteur John Kunkel opened his acclaimed restaurant concept Yardbird Southern Table & Bar, following successful openings in Miami and Las Vegas

Restauranteur Laurent Halasz opened his newest concept, FARMHOUSE, in March 2018. The farm-to-table restaurant has an Executive Farmer, Nathan Pietso, who oversees the farm fresh cuisine

James Beard Award winner and Michelin-starred Chef Michael Mina opened his coastal Italian concept, Cal Mare in November 2017

Chef Akira Back will open his Akira Back Steak concept at Beverly Center, a modern Korean steakhouse offering dry aged meat ranging from 30 days to 120 days as well as sushi

Chef Josh Skeneshelms Saison, a three Michelin starrestaurant recently ranked as one of the best restaurants in the world and recognized as one of the two best restaurants in California

Concept by

We have dramatically upgraded the full service food offerings of the center by transforming a group of generic restaurants into a collection of unique, chef-driven concepts


Eggslut is known for serving the “ultimate breakfast sandwich in Los Angeles.” Customers have waited for more than an hour in line for gourmet egg sandwiches. Eggslutis now open at Beverly Center and has more than 100K Instagram followers

Tocaya Organica is a Mexican fast-casual food concept by Chris Paciello and Mio Danilovic. The restaurant offers modern organic Mexican food and is committed to serving sustainable ingredients as well as fresh, never frozen hormone/steroid/antibiotic-free meats

Artisan bakery café featuring fresh artisan breads and homemade pastries, sandwiches and salads. All offerings are homemade daily from scratch with the highest quality ingredients. Pitchoun is family owned and offers a true French dining experience

Marugame Udon is a popular Japanese udonrestaurant on KuhioAvenue in Waikiki, Oahu, Hawaii and throughout Japan. The restaurant offers fresh ingredients and its authentic noodle making process mirrors the method used in Sanuki, a region in Japan known for its udonnoodles

Easy’s is a fast-casual burger café by Eggslut creator Alvin Cailan and L.A. restauranteur Jeremy Fall, owner of Nighthawk Breakfast Bar, recently featured in the L.A. Times

Level 6

Goal #3: Dramatically Upgrade the Collection of Food Third Street and the 6th floor now feature popular fast-casual restaurants, offering our shoppers a variety of

tastes, experiences and prices

Relocation


Goal #4 - Improve the Arrival, Parking and Departure Experience

Parking Deck● Advanced technology helps shoppers

easily enter/exit and navigate the deck● The renovation increased the lighting in

the deck and improved the aesthetics ● The deck was re-designed to improve

navigation, traffic flow and customer orientation

Level 2Parking Deck

Valet● A new valet was added to service the

restaurants on the street level● LED lights with programmable capabilities

can match the exterior mesh LED lighting● VIP valet was renovated to be consistent

with the overall project, including an express elevator to Level 7

Rendering Level 1 Restaurant ValetLevel 2 & 3 Parking Decks


Goal #5: Elevate the Merchandising

Beverly Center has maintained and expanded its premier collection of

luxury tenants

Added retail offerings across every price level and fashion profile, perfect for the cross-shopping practices of our modern customer

Two new flagship tenants are being added to create a unique shopping experience that cannot be replicated in the market

In 2020, The Webster, a high-end designer flagship boutique, will take the space previously occupied by Capital Grille

Zara has opened a new 28,000 square foot flagship location – their

largest in the L.A. market


Goal #5: Upgrade the Merchandising

Brand Major Store Investment at Beverly Center

Recently opened at the center and is already planning to expand due to its strong performance

Expanded twice already, currently at 4,900 SF and now in the process of expanding for a third time to 7,900 SF including adding a men’s store

Expanded from 2,800 SF to 4,300 SF

More than doubled their store size from 2,000 SF to 4,300 SF and converted from a men’s only to a dual gender store

Built a brand new store and converted from Versace Collection to Versace

Expanded from 4,600 SF to 6,200 SF

Opened a completely remodeled new store in Spring 2018

Expanded from 6,800 SF to 8,300 SF in June 2018

Doubled their store size from 2,800 SF to 5,700 SF in July 2018

More than doubled their store size from 2,100 SF to 4,500 SF in December 2017

Beyond the new tenants joining the center, many of the most important brands have decided to expand their existing presence within the center coincident with the renovation

Conclusion


1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 3Q18Est.

Sales ProductivityPre-Investment

CAGR: +4.2%

CAGR: -6.3%

CAGR: +10.5%

Post-Investment Data Points

Early Indications of Success● Delivered on schedule & on budget● Achieved our five transformational goals● 3Q18 YTD sales per square foot up

double digits● 3Q18 YTD total sales up double digits

● Improved customer and vehicular traffic● Strong initial restaurant performance● Widely embraced by customers and

tenants

Growth Stage Post-Investment


Conclusion

• Following our investment, we believe Beverly Center has resumed its trajectory to reestablish itself as one of the 10 best retail assets in the country

• Sales per square foot are already approaching peak historical levels and are expected to grow significantly

• Beverly Center will be one of about 10 assets in the country with 20 full luxury tenants• This project has completely reset the long-term trajectory of the iconic Beverly Center

Documents

Beverly Center Investor Events1.q4cdn.com/799408505/files/doc_presentations/2019/...Beverly Center - Investor Event– January 16, 2019 3 Taubman Team William S. Taubman is chief operating