Brixmor Property Group Inc. · NYSE:BRX
Brixmor Property — Investor Day (December 2017)
97 slides from Brixmor Property's investor day presentation, Dec 5, 2017
Slide 1: Delivering Value Now
DELIVERING value NOW December 5, 2017 Exhibit 99.2
Slide 2: Welcome!
WELCOME!
Slide 3: Agenda Investor Day
AGENDA INVESTOR DAY Welcome Jim Taylor, Chief Executive Officer & President Leasing Environment / Q&A Brian Finnegan, Executive Vice President, Leasing Retailer Roundtable / Q&A Michael Moss, Executive Vice President, National Accounts Brian Finnegan, Executive Vice President, Leasing Snack Break Va
Slide 4: Leasing Environment
LEASING ENVIRONMENT Brian Finnegan EVP, Leasing
Slide 5: Leasing Overview
OVERVIEW LEASING Retail Environment Leasing Platform Performance & Opportunities Capitalizing on disruption Innovation & relevance driving growth Demand remains robust Occupancy cost matters Balanced coverage model Depth & talent Increased use of data Improved leasing marketing Expanding retailer ba
Slide 6: Retail Environment
ENVIRONMENT Retail disruption always present… Anticipated closures & bankruptcies from “slow death” retailers RETAIL Not investing in stores Not generating traffic Not innovating …Driving retailers toward innovation & relevancy Demand remains robust for our well-located centers New retailers & conce
Slide 7: Balanced Coverage Model
COVERAGE MODEL BALANCED Optimized Leasing Platform National Accounts Retailer liaison – single point of contact Deep industry relationships Account penetration Local Ownership 70 leasing professionals Shopping center “owners” Market insight Best-in-class data & research capabilities Compelling leasi
Slide 8: Leasing Team & Talent
TEAM & TALENT LEASING 20+ average years with portfolio Tenured David Gerstenhaber SVP, National Accounts Michael Moss EVP, National Accounts Barry Rodenstein EVP – President, South David Vender EVP – President, North Attracting & Growing Talent Value-Add David Spawn Director of Research, Marketing K
Slide 9: Growing Tenancy with Thriving Retailers
THRIVING RETAILERS GROWING TENANCY WITH Broadening retailer base & merchandise mix Over 50 new national & regional retailers added since May 2016 Grocers 15 new leases Restaurants (QSR) ~200 new leases Fitness & Entertainment ~60 new leases Other Value 40+ new leases
Slide 10: Capturing Share from Core Tenancy
CORE TENANCY CAPTURING SHARE FROM Brixmor’s Share of New Store Opening Plans (2017 – 2018) Taking off-mall Fitness Institutionalizing relationships
Slide 11: Unlocking Value in Anchors
IN ANCHORS UNLOCKING VALUE 100+ new anchor leases totaling 2.5M square feet executed (since May 2016) Runway for future growth 4M+ SF of anchor leases expiring through 2020 with no remaining options at ABR PSF of $8.27 42% Spread $18M Anchor rent not yet commenced 24% 1H18 39% 2H17 37% 2H18+ Consist
Slide 12: Evolving Tenant Base
TENANT BASE Reduced store count and ABR by more than 45% EVOLVING Sears Exposure Office Supply Exposure Reduced store count and ABR by ~25%
Slide 13: Driving Value in Small Shops
SMALL SHOPS DRIVING VALUE IN Reinvestment ↗ 600 – 800bps small shop occupancy improvement following reinvestment Leveraging new anchor leasing Broadening tenant mix with strong local operators Driving absorption through targeted marketing
Slide 14: Case Study: California Oaks Center
Riverside, CALIFORNIA CASE STUDY: CALIFORNIA OAKS CENTER Remerchandised former Ralphs with a 19K SF Barons Market Completed March 2016 Small Shop Occupancy 2,110bps ↗ Small Shop ABR PSF 12% ↗
Slide 15: Case Study: Harpers Station
CINCINNATI, OHIO CASE STUDY: HARPERS STATION Remerchandised former Bova furniture with a 29K SF Fresh Thyme Farmers Market (Meijer) Combined adjacent small shop vacancies to accommodate an 8K SF Pet Supplies Plus Completed March 2015 1,810bps ↗ Small Shop Occupancy 19% ↗ Small Shop ABR PSF
Slide 16: Local Anchors
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Slide 17: Outparcel Initiative
INITIATIVE OUTPARCEL Adding density & delivering value with retailers relevant to the community 16 outparcel leases executed at ABR PSF of $33 (since May 2016) 70+ additional leases / LOIs under negotiation at average ABR PSF of $37
Slide 18: Monetizing Strong Locations
STRONG LOCATIONS MONETIZING Pop-up shops Food trucks New Lines of Revenue Specialty Revenue ($M) Focused specialty leasing to drive additional growth through community outreach & innovation Solar Car charging stations 11% CAGR
Slide 19: Generating Additional Tenant Demand
TENANT DEMAND Use smartphone data to define trade areas Captures home location and trip frequency of actual visitors for the past year Identifies true drawing power of a center versus radius rings GENERATING ADDITIONAL Wynnewood Village Dallas, TX
Slide 20: Unmet Demand
DEMAND UNMET $77M in grocery dollars leaving the 3-mile radius
Slide 21: Spending Power
POWER SPENDING Grocery spending 30%+ above US average
Slide 22: Neighborhood Rejuvenation Index
Rejuvenation Index Per capita income 1.07 Median home value 1.06 Education (% college educated) 1.17 Household population 1.06 Average 1.09 REJUVENATION INDEX NEIGHBORHOOD Above 1.0 = Higher growth than market Developed by Brixmor marketing to illustrate changing market dynamics
Slide 23: Leasing Marketing
MARKETING LEASING Winning business beyond what’s expected
Slide 24: Last 12 Months Results & Production
Last 18 Months RESULTS & PRODUCTION 4.9M square feet of new leases executed $63M new incremental ABR created 30% average new lease rent spread
Slide 25: Question & Answer
QUESTION & ANSWER
Slide 26: Retailer Roundtable
RETAILER ROUNDTABLE
Slide 27: Retailer Roundtable
ROUNDTABLE RETAILER Innovation to serve the customer Laurie Mahowald VP, Real Estate Ted Frumkin Chief Development Officer David Krueger SVP, Growth and Development Brian Finnegan EVP, Leasing Michael Moss EVP, National Accounts MODERATORS
Slide 28: Question & Answer
QUESTION & ANSWER
Slide 29: Snack Break
SNACK BREAK
Slide 30: Value Through Reinvestment
VALUE THROUGH REINVESTMENT Bill Brown EVP, Development & Redevelopment
Slide 31: Unlocking Value Through Reinvestment
REINVESTMENT UNLOCKING VALUE THROUGH Breadth of Opportunity Pipeline of > $1B Average project size of ~$15M Over 100 centers targeted Complimentary densification Attractive Relative Risk Substantially pre-leased Short execution timelines or multi-phased larger projects Funded primarily with free cas
Slide 32: North: Deep Dive into Reinvestment
NORTH DEEP DIVE INTO REINVESTMENT David Vender EVP – President
Slide 33: North Value Now
NORTH VALUE NOW Highridge Plaza Yonkers, NY Mamaroneck Centre Westchester, NY Ivyridge Philadelphia, PA Rendering
Slide 34: Major Redevelopment: Village at Newtown
MAJOR REDEVELOPMENT VILLAGE AT NEWTOWN
Slide 35: Village at Newtown Custom Trade Area
Custom Trade area Located 30 miles north of downtown Philadelphia in an affluent, well-educated, yet underserved trade area Average household incomes of ~$150K, 95% above the national average 58% college-educated, 29% above the national average VILLAGE AT NEWTOWN Demographics – Custom Trade Area Pop
Slide 36: Village at Newtown Redevelopment Plan
REDEVELOPMENT VILLAGE AT NEWTOWN Redevelopment Plan Existing Center 177K SF center, 83% leased
Slide 37: Village at Newtown Redevelopment Summary
Before After – Rendering REDEVELOPMENT SUMMARY VILLAGE AT NEWTOWN Net estimated costs of $34M and expected NOI yield of ~9% Addition of 60K SF to create “Town Square” including public amphitheater Rejuvenate center with aesthetic improvements Restore historic Toll House (est. 1870)
Slide 38: Renderings: Village at Newtown
RENDERINGS VILLAGE AT NEWTOWN
Slide 39: Midwest: Deep Dive into Reinvestment
MIDWEST DEEP DIVE INTO REINVESTMENT Vince Corno EVP – President
Slide 40: Midwest Value Now
MIDWEST VALUE NOW Commons of Chicago Ridge Chicago, IL Maple Village Ann Arbor, MI Market Centre Elkhart, IN
Slide 41: Minor Redevelopment: Speedway Super Center
MINOR REDEVELOPMENT SPEEDWAY SUPER CENTER
Slide 42: Speedway Super Center Custom Trade Area
Custom Trade area Closest center to Indianapolis Motor Speedway, the world’s largest spectator facility and home to the world’s two largest single-day sporting events Speedway Super Center is the only retail center included in a $520M, 700-acre redevelopment by the Speedway Redevelopment Commission
Slide 43: Speedway Super Center Redevelopment Plan
REDEVELOPMENT SPEEDWAY SUPER CENTER Redevelopment Plan Existing Center Top retail center in trade area 586K SF center, 89% leased
Slide 44: Speedway Super Center Redevelopment Summary
REDEVELOPMENT SUMMARY SPEEDWAY SUPER CENTER Net estimated costs of $13M and expected NOI yield of ~9% Reposition center through multi-phase redevelopment Remerchandise with national retailers such as Ross, Burlington, Five Below Enhance restaurant experience with “Main Street” configuration Before A
Slide 45: Renderings: Speedway Super Center
RENDERINGS SPEEDWAY SUPER CENTER
Slide 46: South: Deep Dive into Reinvestment
SOUTH DEEP DIVE INTO REINVESTMENT Barry Rodenstein EVP – President
Slide 47: South Value Now
SOUTH VALUE NOW Bay Pointe Plaza Tampa / St. Petersburg, FL The Commons at Wolfcreek Memphis, TN Prototype Miami Gardens Miami, FL Rendering
Slide 48: Major Redevelopment: Mall at 163rd Street
MAJOR REDEVELOPMENT MALL AT 163rd STREET
Slide 49: Mall at 163rd Street Custom Trade Area
Custom Trade area Located in North Miami Beach in a densely populated, ethnically diverse market Population density of 260K+ Income levels continue to improve Theatre market void with 33K people per screen, and no alternative entertainment options within the trade area MALL AT 163RD STREET Demograph
Slide 50: Mall at 163rd Street Redevelopment Plan
REDEVELOPMENT MALL AT 163rd STREET Redevelopment Plan Existing Center Enclosed mall originally built in 1956 339K SF center, 71% leased
Slide 51: Mall at 163rd Street Redevelopment Summary
REDEVELOPMENT SUMMARY MALL AT 163rd STREET Net estimated costs of $60M and expected NOI yield of ~9% De-mall center to drive rental rates with additional street exposure Enhance restaurant experience along 163rd Street Expand merchandise mix with potential addition of grocery, fitness and entertainm
Slide 52: Renderings: Mall at 163rd Street
RENDERINGS MALL AT 163rd STREET
Slide 53: West: Deep Dive into Reinvestment
WEST DEEP DIVE INTO REINVESTMENT Matt Berger EVP – President
Slide 54: West Value Now
WEST VALUE NOW Gateway Plaza – Vallejo Vallejo, CA Preston Ridge Frisco, TX Rose Pavilion Pleasanton, CA
Slide 55: Major Redevelopment: University Mall
MAJOR REDEVELOPMENT UNIVERSITY MALL
Slide 56: University Mall Custom Trade Area
Custom Trade area Located directly across from UC Davis with 35K+ students Situated in a young, affluent, well-educated, yet underserved trade area Projected 5-year annual population growth 2x above the national average Average household incomes of $96K, 25% above the national average UNIVERSITY MAL
Slide 57: University Mall Redevelopment Plan
REDEVELOPMENT UNIVERSITY MALL Redevelopment Plan Existing Center 104K SF center, 93% leased Potential to add 65K+ SF of GLA
Slide 58: University Mall Redevelopment Summary
REDEVELOPMENT SUMMARY UNIVERSITY MALL Net estimated costs of $40M and expected NOI yield of 10% – 12% (including anticipated residential entitlement sales) Merchandise with retailers relevant to student population Potential to add residential / student housing component Enhance restaurant experience
Slide 59: Renderings: University Mall
RENDERINGS UNIVERSITY MALL
Slide 60: Question & Answer
QUESTION & ANSWER
Slide 61: Sustainable Performance
SUSTAINABLE PERFORMANCE Haig Buchakjian EVP, Operations
Slide 62: Operational Excellence
EXCELLENCE OPERATIONAL Tenant Relationships Accelerate rent commencement dates Reduce downtime Promote repeat business Build partnerships and awareness Being Local Elevate look and feel of centers Be more relevant to our communities Increase traffic Increase tenant sales Improve retention Higher Sta
Slide 63: Tenant Relationships
RELATIONSHIPS Tenant onboarding through tenant coordinators TENANT 42% leases commencing ahead of target date ~1 month average time saved per deal $710K rent achieved from early commencement Narrowing the gap from lease execution to rent commencement (1H 2017): Tenant engagement through Satisfaction
Slide 64: Being Local
LOCAL BEING Taking ownership of our centers to better serve our communities Eliminating third-party service aggregators Recapturing margin to drive higher service levels Elevating and applying consistent minimum maintenance standards portfolio-wide Making a “Center of the Community” The Shoppes at C
Slide 65: Being Local: Community Relevance
LOCAL BEING Taking ownership of our centers to better serve our communities Being Relevant to the Community Getting tenants up and running following Hurricane Irma Mural by Living Walls at Northeast Plaza Supporting Feed the Children to feed 800 families in Vestal, NY Distributing school supplies af
Slide 66: Higher Standards
STANDARDS HIGHER GREEN STAR RECIPIENT Reducing Energy & Expense Lighting 50% reduction in electricity consumption Smart Irrigation 40M gallons of water saved per year Generating Revenue Electric Vehicle Charging Stations 125K gallons of gas saved >10 MW renewable energy generated Solar Power Reducin
Slide 67: Capital Recycling
CAPITAL RECYCLING Mark Horgan EVP, Chief Investment Officer
Slide 68: Prudent & Responsible Capital Stewardship
CAPITAL STEWARDSHIP PRUDENT & RESPONSIBLE Disciplined Capital Allocation Unlevered IRR focused Informed investment decisions based on local market knowledge Significant Opportunity Lack of historical portfolio strategy Granular asset base: largest asset is < 2% of ABR No asset “must be” reinvested i
Slide 69: Underwriting: Asset Level vs. Portfolio
UNDERWRITING ASSET LEVEL VS. PORTFOLIO Holding an asset Buying the asset FINANCIAL Disciplined underwriting Risk-adjusted unlevered hold IRRs and incremental returns MARKET Operational and leasing advantages when a significant landlord in a market Focus on exiting non-strategic markets HUMAN CAPITAL
Slide 70: Deal Size Matters
DEAL SIZE MATTERS LIQUIDITY Smaller assets allow greater transactional flexibility and liquidity across market conditions Brixmor completed dispositions average ~$15M Retail Asset Sales Volume: Under $25M vs. Over $25M Source: RCA (25%) (5%)
Slide 71: Diverse Investor Demand
INVESTOR DEMAND DIVERSE Focused on one-off asset sales to maximize shareholder value 16 dispositions YTD 15 unique buyers 80 bidders total Institutional Advisors Private / Regional Capital REITs (Public / Private) Representative Bidders:
Slide 72: Demonstrating Liquidity Across Markets
DEMONSTRATING LIQUIDITY ACROSS MARKETS ~$385M of assets sold since May 2016 at an average cap rate of ~7% with demographics & metrics below portfolio averages Population (5-mile) 36% below Avg. HH income (5-mile) 17% below ABR 16% below
Slide 73: Acquisitions to Drive Long-Term Growth
Long-term growth Clustering investments in productive retail nodes Build critical mass and drive efficiencies Drive ROI growth - not just NOI growth ACQUISTIONS TO DRIVE 500+ opportunities reviewed since May 2016 5 assets purchased We remain very selective Venice Village Shoppes – Venice, FL $34M; L
Slide 74: Case Study: Arborland Center
Ann ARBOR, MICHIGAN CASE STUDY: Arborland Center Acquired March 2017 404K SF grocery-anchored regional center Positioned Brixmor as largest open-air landlord in market Future densification opportunities
Slide 75: Ongoing Capital Recycling
CAPITAL RECYCLING ONGOING Capital recycling will be an on-going driver of outperformance, long-term value & attractive risk-adjusted returns Accelerated Disposition Volume ($M) Targeting $400 - $600M annually Number of Assets 16 7 5 1 Disciplined Acquisitions in Target Markets ($M) Targeting $400 -
Slide 76: Where We Are Today
ARE TODAY WHERE WE Portfolio as of 9/30/17 weighted by ABR 84M square feet 38 states 165 MSAs 498 shopping centers 8 single asset markets under contract to sell 12 single asset markets exited in last 18 months
Slide 77: Where We Are Going
ARE GOING WHERE WE Representative Pro Forma Portfolio Target Markets Bay Area California Southern California Denver, Colorado Miami, Florida Orlando, Florida West Coast, Florida Atlanta, Georgia Boston, Massachusetts Minneapolis, Minnesota Kansas City, Missouri Metro New York Raleigh-Durham, North C
Slide 78: The Path Ahead
THE PATH AHEAD Angela Aman EVP, Chief Financial Officer & Treasurer
Slide 79: Long-Term Business Plan Outlook
PLAN OUTLOOK LONG–TERM BUSINESS Investing now to drive consistent & sustainable future growth Generate long-term unlevered asset-level growth of 4%+ through: Core growth of 2.5%, comprised of contractual rent growth and mark-to-market realization $150 – 200M of annual value-accretive redevelopment s
Slide 80: 2018E Same Property Base Rent Growth
BASE RENT GROWTH 2018E SAME PROPERTY 2018E same property base rent growth reflects industry-leading leasing productivity, offset by elevated drag due to ramping future redevelopment and remerchandising activity
Slide 81: Same Property Base Rent Growth Guidance
GROWTH GUIDANCE SAME PROPERTY BASE RENT 2.25% (mid-point) 2.00% (mid-point) 3.25% (mid-point) In Process & Future Redevelopment Core Successful redevelopment execution is expected to become a meaningful contributor to growth in 2019
Slide 82: Future Growth Through Redevelopment
REDEVELOPMENT FUTURE GROWTH THROUGH 3Q 2017 in process pipeline represents $188M of investment at incremental NOI yields of 9% or gross NOI yields of >15% $16M of incremental base rent creation, 75% of which is expected to deliver by the end of 2019 We expect the in process pipeline to grow to ~$400
Slide 83: Same Property NOI Growth Guidance
GROWTH GUIDANCE 2018 Commentary Base rent assumes 90bps of drag related to bankruptcies and proactive terminations Provision for doubtful accounts reflects difficult year-over-year comparison, primarily as a result of significant recoveries in 2017 of previously reserved amounts “Other” reflects net
Slide 84: Funds From Operations Guidance
GUIDANCE FUNDS FROM OPERATIONS Low High 2017E NAREIT FFO per diluted share (previously provided) 1 $2.05 $2.09 Same property NOI growth 0.02 0.02 Non-cash GAAP rental adjustments 2 (0.04) (0.04) Other, including 2017 capital recycling executed to date 3 (0.04) (0.01) 2018E NAREIT FFO per diluted sha
Slide 85: Balance Sheet Strategy
STRATEGY BALANCE SHEET At IPO 3.31.16 9.30.17 Target Weighted average maturity (years) 4.1 3.5 5.4 > 7.0 Percentage of fixed rate debt 90% 82% 96% > 90% Net principal debt to cash adjusted EBITDA 7.9x 7.1x 6.8x 6.0x Weighted Avg. Stated Interest Rate 6.3% 2.2% 2.3% 6.2% 3.5% 3.9% 3.3% 3.4% 3.9% 4.2%
Slide 86: Question & Answer
QUESTION & ANSWER
Slide 87: Appendix – Biographies
APPENDIX – BIOGRAPHIES
Slide 88: Meet the Key Leadership at Brixmor
BRIXMOR PROPERTY GROUP MEET THE KEY LEADERSHIP AT Jim Taylor has served as Chief Executive Officer and President of Brixmor Property Group since May 2016 and has more than 20 years of experience in the commercial real estate industry. From 2012 until joining Brixmor, he was Executive Vice President
Slide 89: Meet the Key Leadership at Brixmor
BRIXMOR PROPERTY GROUP MEET THE KEY LEADERSHIP AT Matthew Berger EVP – President, West Matthew Berger has served as Executive Vice President – President, West of Brixmor Property Group since 2016. In this role, he is responsible for overseeing the leasing, operations and asset management of over 110
Slide 90: Meet the Key Leadership at Brixmor
BRIXMOR PROPERTY GROUP MEET THE KEY LEADERSHIP AT Mark Horgan has served as Executive Vice President, Chief Investment Officer of Brixmor Property Group since May 2016. From 2007 to May 2016, Mr. Horgan was a Managing Director and a senior member of the retail team at Eastdil Secured, where he advis
Slide 91: Meet the Key Leadership at Brixmor
BRIXMOR PROPERTY GROUP MEET THE KEY LEADERSHIP AT David Vender has served as Executive Vice President – President, North of Brixmor Property Group since 2016. In this role, he is responsible for overseeing the leasing, operations and asset management of over 120 shopping centers, totaling 14 million
Slide 92: Meet the Retailer Roundtable Panelists
RETAILER ROUNTABLE PANELISTS MEET THE Ted Frumkin Chief Development Officer, Sprouts Farmers Market Ted Frumkin has served as Sprouts’s Chief Development Officer since early 2015. He joined the Sprouts team in December 2012 as Senior Vice President of Business Development. In this role, he is respon
Slide 93: Reconciliations
RECONCILIATIONS
Slide 94: Reconciliation: Funds From Operations
RECONCILIATION FUNDS FROM OPERATIONS (Dollars in millions, except per share amounts) 2018E 2018E Per Diluted Share Net income attributable to common stockholders $241 – $268 $0.79 – $0.88 Depreciation and amortization $355 $1.16 NAREIT FFO $596 – $623 $1.95 – $2.04
Slide 95: Glossary of Terms
GLOSSARY OF TERMS
Slide 96: Glossary of Terms
For a glossary of terms used but not defined herein, refer to the “Glossary of Terms” in the Company’s Supplemental Disclosure for the quarter ended September 30, 2017, which is available on the Company’s website and is an exhibit to its Form 8-K filed with the SEC on October 30, 2017. OF TERMS GLOS
Slide 97: Disclaimer: Forward-Looking Statements
DISCLAIMER FORWARD-LOOKING STATEMENTS This document and the accompanying presentation contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements include, but are not limited to, statement
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