THE STATE OF U.S. OUTLET CENTER REAL ESTATE

where are We today 241 U.S. Outlet Centers (give or take) Roughly 80 different owners Large owners are Simon, Tanger, Horizon, Craig Realty, The Was Group, EWB Development, AWE Talisman, CBL, Macerich, Taubman, Glimcher 30 New Centers over past 4 Years (15% growth) 10 New Centers in 2014; 66 Centers in Development Dynamic and Changing

How Did We Get Here Pre-Recession 2000’s Simon bought Chelsea in 2004 Still, Lifestyle Centers were really the only thing that mattered in the mall development world 1 to 3 new outlet centers were being built a year Primarily focused on tourist markets or on periphery of major metros Centers were built in places like Atlantic City, Las Vegas, Charleston, Seattle, El Paso, McAllen, Wisconsin Dells, Chicago, Philadelphia etc.

How Did We Get Here Heart of Recession (2008-2009) Outlet Centers Hold Up (what Lifestyle Center?) 2008 Simon Mall Portfolio (-4.3%); 2008 Premium Outlet Portfolio +1.8% 2009 Simon Mall Portfolio (-1.8%) 2009 Premium Outlet Portfolio +5.8% Post-Recession (2010+) Every Developer: “We Better Get In This Outlet Game!”

How Did We Get Here 2006 to 2009: Proposed Lifestyle Centers (2009 Began Tracking Outlet Centers) RECESSION

How Did We Get Here 2010 to 2014: Proposed Lifestyle Centers and Outlet Centers

How Did We Get Here 28 New Outlet Centers in Past 3 Years

How Did We Get Here Why Build? Just Put Outlet In The Name Great Lakes Crossing Block at Orange The Legends Village West Legends at Sparks Marina Jersey Gardens SuperMall of the Great NW Louisiana Boardwalk The Pike at Long Beach St. Louis Mills Great Lakes Crossing Outlets The Outlets at Orange Legends Outlets Kansas City Outlets at Sparks Outlet Collection Jersey Gardens Outlet Collection Seattle Outlets at Louisiana Boardwalk Outlets at The Pike St Louis Outlet Mall

What is driving outlet malls to certain Markets? Which Markets Don’t Have an Outlet Yet? Which Markets Are Still Operating on the Old Model? Which Markets Are Big Enough to Support Multiple Outlet Centers? What’s Left?

What is driving outlet mall locations Which Markets Don’t Have an Outlet Yet? Recent Examples: St. Louis Oklahoma City Louisville Birmingham Jackson, MS Syracuse, NY Coming Soon? Are We Getting Too Small? Examples: Tucson Savannah Asheville Tulsa Corpus Christi Springfield, IL Little Rock Des Moines Coeur d’Alene Anchorage Memphis Augusta, GA Grand Rapids Richmond Tyler, TX

What is driving outlet mall locations Which Markets have an Outlet but not close to town (Old Model)? Recent Examples: Houston Twin Cities Charlotte Atlanta Cincinnati Rosemont Pittsburgh National Harbor (DC) Philadelphia Coming Soon? What is too far away? Examples: Hartford New York Columbus San Francisco Indianapolis Houston Detroit Miami Sacramento

What is driving outlet mall locations Which Markets Can Support Multiple Outlet Centers? Recent Examples: Houston (2nd center) DC (2nd center) Dallas (2nd center) Phoenix (2nd & 3rd center) Boston (2nd & 3rd center) Atlanta (2nd center) Coming Soon? How Close Can They Locate? Examples: Houston (3rd center) Tampa (2nd center) DC (3rd center) Seattle (2nd center) Dallas (3rd center) San Francisco, NY, LA, etc. Denver (2nd center)

Where do we go from here 6 to 10 Outlet Centers built in the U.S. in each of next 3 to 4 Years Smaller Markets and Closer Spacing Sensitivity is dead – Outlet centers can go anywhere Driven by retailer demand The principles of good real estate still apply (can’t just go anywhere)

Two Game Changing Centers Fashion Outlets of Chicago at Rosemont Regional Mall Location In-board of existing outlet centers 10 miles in-board of Woodfield Mall; 8 miles from Old Orchard Mall Indoor Outlet Center Interior design/seating/finishes similar to Regional Mall standards

Two Game Changing Centers The Outlets at Assembly Row Mixed-Use Project (includes office and apartments above retail). 2 miles from downtown Boston - located on the T Line Includes entertainment – AMC Theater, Lego Discovery Center Includes Restaurants – Earl’s Kitchen, Legal Seafood, etc. Outlet Lifestyle Center

Two Potential game changers On-Line Outlet Product Growing number of retailers selling their outlet product on-line through their own websites In addition to selling through Amazon and flash-sale sites TJ Maxx on-line is seeing strong sales growth

Two Potential game changers Outlet Retailers are Locating Outside of Outlet Centers Street Retail Value Oriented Strip- Centers 155 Nordstrom Rack Locations 1,100 TJ Maxx and 900 Marshalls Locations 1,100 Ross Stores B Malls NIKE Factory Store in Strip Center in Louisville, KY J Crew Factory Store at Plymouth Meeting Mall

Two Potential game changers Outlet Retailers with Street and Strip Center sites GAP Factory Store Locations in NYC (No Traditional Outlet Malls)

Two Potential game changers Outlet Retailers in Value Centers (Typical New Hybrid-Center)