Corporate Profile November 2013
Forward Looking Statements (1) This presentation contains forward-looking statements, including, without limitation, statements concerning the Company s operations, economic performance and financial condition. Such forward-looking statements are based upon the current beliefs and expectations of the management team of Rouse Properties, Inc. (the Company ), and are subject to risks, uncertainties and other factors which could cause actual results to differ materially from the results suggested by the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. Factors that could cause actual results to differ materially from current expectations include the assumptions contained in this presentation; general economic conditions and conditions in the retail sector; the Company s limited operating history as an independent company; the Company s ability to obtain operating and development capital; the Company s ability to generate internal and external growth; the Company s ability to identify and complete the acquisition of properties in new markets; the ability of the Company s tenants to pay minimum rents and expense recovery charges and the impact of co-tenancy provisions in the Company s leases; the Company s ability to sell real estate and restrictions on transfer; the Company s ability to compete effectively; the Company s significant indebtedness; the Company s ability to maintain its status as a REIT; the Company s ability to complete redevelopment projects; the Company s ability to lease or re-lease space in its properties; increases in interest rates; the effect of inflation; increases in operating costs and real estate taxes; and the other risks described in the Company s Annual Report on Form 10-K for the year ended December 31, 2012 under the caption Risk Factors. The Company discusses these factors, risks and uncertainties in its Annual Report on Form 10-K for the year ended December 31, 2012 and its Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, which have been filed with the Securities and Exchange Commission, and the information set forth herein should be considered in light of such factors, risks and uncertainties. The Company does not assume any obligation to update the information in this presentation. Source: Company Filings (1) All financial and leasing information as of September 30, 2013. 1
Business Overview 2
Nationally Diversified Portfolio with Focus on Protected Malls ~80% of Rouse s 32 assets are only game in town enclosed malls, supported by a stable economic backdrop and attractive household income Three Rivers Mall (39 miles) San Francisco Regional Office Gateway Mall (4 miles) Bayshore Mall (153 miles) Southland Mall (11 miles) West Valley (28 miles) NewPark Mall (12 miles) Chula Vista Mall (4 miles) The Mall at Sierra Vista (76 miles) Silver Lake Mall (22 miles) Cache Valley Mall (50 miles) White Mountain Mall (169 miles) Animas Valley Mall (119 miles) North Plains Mall (102 miles) Collin Creek (9 miles) Vista Ridge (7 miles) Knollwood Mall (6 miles) Lansing Mall (11 miles) Spring Hill Mall (19 miles) Westwood Mall (38 miles) Washington Park Mall (49 miles) Mall at Turtle Creek (76 miles) Sikes Senter (57 miles) Pierre Bossier Mall (6 miles) Mall St. Vincent (6 miles) Grand Traverse Mall (97 miles) Birchwood Mall (43 miles) Southland Center (11 miles) Steeplegate Mall (27 miles) New York City Corporate Office Colony Square Mall (28 miles) Valley Hills Mall (35 miles) Greenville Mall (39 miles) Number of Properties Total GLA Mall & Freestanding GLA Portfolio Statistics 32 21.5 m SF 10.1 m SF % Leased (1) 90.7% Tenant Sales (2) $299 PSF Lakeland Square Mall (32 miles) Dallas Regional Office Note: Distances are as per automobile driving distance Source: Company filings (1) Represents contractual obligations for space in Rouse malls and excludes traditional anchor stores (2) Trailing twelve month tenant sales for mall stores less than 10,000 square feet 3
Favorable Industry and Economic Trends Rouse is positioned to benefit from positive economic and demographic trends in its markets Significantly improving strength in middle markets of America in agriculture, manufacturing, automotive sector and development of natural energy resources 4.5% 2012-2017 Households Grow th 18.0% 2012-2017 HHI Grow th 16.7% 300 bps 2009-2012 Unemployment Decrease 4.3% 4.1% 3.9% 3.7% 4.1% 3.8% 16.0% 14.0% 12.0% 13.4% 275 bps 250 bps 225 bps 262 bps 210 bps 3.5% RSE U.S 10.0% RSE U.S 200 bps RSE U.S Miles 50 40 30 20 Average Distance to Nearest Mall 36 19 $ in thousands Approximate Average Household Income $80 $70 $75 $60 $40 10 $20 0 RSE US Mall Avg. $0 RSE US Mall Avg. Source: Company filings, U.S. Census, ESRI and Wall Street Research 4
External Trends Favorable Landscape Retailer Expansion in B Malls Tenants increasingly focused on fulfilling expansion plans and profit margins afforded in B malls B malls offer retailers the ability to fulfill growth plans with 44K+ planned new store openings over the next twelve months, 27% greater than 2009 Big Box Tenant Evolution Trend of big-box retailers moving into malls continues and is accelerating Rouse malls offer superior real estate in their markets coupled with high traffic and sales 80% are single-level, providing flexibility for reconfiguring inline GLA Lack of New Construction Tenants are seeking growth options in a supply constrained environment At over $3 billion in annual sales, Rouse s portfolio is an attractive alternative to lifestyle, strip and power centers 5
Targeted Leasing Approach Fully staffed leasing team with entrepreneurial minded individuals Decentralized approach, as opposed to leasing from the corporate office Focused leasing strategy aimed at bringing back relevance to each asset Entertainment Everyday Uses The level of attention and swift implementation of Rouse s strategic capital projects has been outstanding and has helped Cinemark deliver on our pipeline. This partnership is sure to significantly improve the sales, traffic and the vitality of the malls we are joining. Cinemark High Volume Restaurants Big-Box Anchors Rouse is a leader in the industry, paying close attention to opportunities for repositioning We at Regal are passionate about providing a superior movie experience in the same way that Rouse shows intense passion for delivering excellent experiences related to shopping, dining and entertainment. Regal Cinemas 6
Internal Growth Building Blocks of Target 8% CAGR 2012 2016 Increase Occupancy 93% portfolio occupancy target (2006 level) 1% increase represents ~$3.5 million incremental NOI 2016 Target Same Property NOI Growth of ~$53M by 2016 Represents CAGR of Over 8% Temporary to Permanent Conversion Target 86-87% permanent and 6-7% temporary occupancy 1% of temporary to permanent conversion represents ~$1.5 million incremental NOI Execute Strategic Projects Unlevered yield for strategic projects of ~9-11% before multiplier effect on the balance of mall Increase Sales PSF Target sales above $330 PSF $10 PSF increase represents ~$12 million incremental NOI Contractual rent growth supported by higher sales Cosmetic projects drive frequency and duration of stay ~$53M Internal Growth of Spin Portfolio (1) Increased Occupancy Temporary to Permanent Conversion Return on Strategic Projects Increase Sales PSF 2012 (1) Excludes The Boulevard Mall and acquisitions post spin 7
Steady Progress in Achieving 2016 Target Occupancy Levels Portfolio 90.7% leased excluding anchors (94.0% leased including anchors) as of Q3 2013 Total percentage leased increased 300 bps since our formation date Permanent percentage leased increased by 560 bps since our formation date 2016 occupancy targets reflect portfolio s performance in 2006, prior to recession and GGP bankruptcy 95.0% 90.0% 85.0% 80.0% 87.7% 13.6% 89.3% 12.3% 90.7% 11.0% 93.0% 7.0% Q3 2013 Since Inception % of 2016 Target Achieved Total ~300 bps 57% 75.0% 70.0% 65.0% 60.0% 74.1% 77.0% 79.7% 86.0% 2011 2012 Q3 2013 Q3 2016 At Spin Present Target (1) (2) % Leased Permanent % Leased Temporary Permanent ~560 bps 47% Temporary ~260 bps 39% Results achieved while simultaneously building out platform, team and public company infrastructure (1) All contractual obligations for space in Rouse malls, exclusive of traditional anchor stores and Specialty Leasing. (2) Includes temporary tenants on license agreements with terms in excess of 12 months. 8
Strong Leasing Momentum 2,140,000 SF leased in 2012; 133% greater than the 2011 total of 920,000 SF In Q3 2013, achieved sixth straight quarter of leasing over 525,000 SF 1,670,000 SF leased in 2013 YTD, 13% greater than Q3 2012 YTD total of 1,480,000 SF YTD Comparison vs. 2011 Quarterly Leased SF Pre-Spin Post-Spin Pre-Spin Post-Spin 2,000,000 1,500,000 1,479,803 1,669,539 800,000 700,000 600,000 500,000 551,146 698,112 655,024 610,005 529,769 529,765 1,000,000 500,000 0 679,522 RSE RSE GGP Q3 2011 Q3 2012 Q3 2013 400,000 300,000 200,000 100,000-238,473 230,545 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q3 Year over Year Year to Date Q3 2013 Leasing Q3 2012 Leasing Number Sq. Ft. Number Sq. Ft. Renewal Leases 92 373,231 77 397,520 New Leases 22 156,534 51 300,592 Total 114 529,765 128 698,112 Q3 2013 YTD Leasing Q3 2012 YTD Leasing % SF Number Sq. Ft. Number Sq. Ft. Change Renewal Leases 225 933,590 208 818,866 14.0% New Leases 80 735,949 117 660,937 11.3% Total 305 1,669,539 325 1,479,803 12.8% Note: Growth figures reflect increases over YTD 2011. 9
Leasing Progress Rouse has signed 3.8 million square feet of total leases since inception, as we continue to upgrade the quality of the retailer mix As we continue to explore opportunities for smaller and middle market locations we look to partner with Rouse for our expansion. Rouse is offering exactly what we expect in terms of merchandise mix, strategic capital upgrades and continuous enhancements to the customer experience Chico s It s been very satisfying and quite refreshing to deal with Rouse over the past year. Their entrepreneurial spirit and grand vision for retail properties shows a skill that few developers possess Foot Locker 10
Signed Not Yet Opened (SNO) Current SNO represents significant NOI uplift In Q3, SNO totaled 707,000 SF, of which 73 percent will be occupying vacant space Represents $11.1 million of incremental NOI which will come online in Q4 2013 and throughout 2014 Rent commencements / openings dictated by build-out times and retailers opening schedules 92.0% 90.0% 88.0% 86.0% 84.0% 88.4% 87.7% 87.5% 86.6% 85.5% 85.6% 89.3% 85.2% 90.0% 89.2% 85.9% 85.8% 89.9% 86.5% 90.7% 88.2% This 250 bps of SNO represents $11.1 million incremental NOI, 73% to occupy currently vacant space 82.0% At Spin 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 % Occupied % Leased 11
Case Study: Southland Center - Taylor, Michigan Strong Leasing Momentum Improved percentage leased from 86.4% to 93.2%, Active replacement of underperforming and temporary tenants New: Forever 21, Pink by Victoria's Secret, Lids Locker Room, Torrid, Justice, Foot Action and Rue 21 Signed Not Opened: Francesca s, Shoe Carnival, Auntie Anne s and Nestle Toll House $400 $375 $350 $325 $300 Historical Sales PSF $385 $361 $371 $334 $318 2009 2010 2011 2012 Sep. 2013 New Junior Anchor Deals Completed New Inline Tenant 12
Anchor Progress Since Spin Of the six anchors vacant at formation, two acquired for redevelopment and four that have vacated since spin, only three remain to be addressed Deals opened or executed include Regal Cinemas, Cinemark, Sports Authority, Bon-Ton, Dunham s Sports, John s Incredible Pizza, Virginia College and Walmart. In addition, Rouse has leased three out of its four vacant Circuit City / Borders boxes Replacements were Forever 21, TJ Maxx and Walmart Neighborhood Market Anchors Borders/Circuit City 12 12 12 # of Stores 11 10 9 8 7 6 5 4 3 2 1 0 Vacant Post Spin 4 Strategically Purchased Anchors for Redevelopment 2 Vacant at Spin 6 Anchors 11 10 9 8 7 6 5 4 3 2 1 0 Vacant 3 To Be Announced Bon-Ton John s Incredible Pizza Regal Cinemas Cinemark / Sports Authority Regal Cinemas Dunham s Sports Dunham s Sports Virginia College Walmart Anchors Out for Signature Signed Not Yet Occupied 11 10 9 8 7 6 5 4 3 2 Opened TJ Maxx Forever 21 1 0 Vacant 1 Walmart Forever 21 Opened 13
JCPenney and Sears JCPenney Rouse exposure totals 26 anchors of which 15 are Landlord owned Generally well located in the mall in markets with strong big box demand $2.97 Base Minimum 15 Owned Rent JCPenney PSF Boxes Sears Rouse exposure totals 21 anchors of which 10 are Landlord owned Sears stores are often the best sites at their respective malls because their Homart Division developed a number of the properties $3.48 Base 15 Owned Minimum Sears Rent Boxes PSF 15 Landlord Owned 10 Landlord Owned ~72,000 Average Square Footage All but 2 are Single- Level ~84,000 Average Square Footage All are Single- Level 2.8% Occupancy Cost 3.3% Occupancy Cost Rouse s JCPenney and Sears boxes are primarily single-level assets that are more readily divisible and should provide material upside upon re-leasing 14
Sears Case Study Sears vacated two boxes upon lease expiration in early 2013; within 60 days, Rouse re-leased both boxes to higher volume, more market relevant retailers Both transactions were executed at multiples of prior rent and have generated strong returns on capital deployed Three Rivers Mall Regal Cinemas executed lease for 50,000 SF state of the art multiplex theater Entertainment draw increases foot traffic, and varies and extends shopping visits throughout the week Has created significant pipeline of demand from new junior anchor tenants and high volume restaurants Colony Square Dunham s Sporting Goods flagship store opened in September 2013 Only full-line sporting goods retailer in the trade area, capitalizing on outdoor and recreational focus of market Continues to benefit from growing population and incomes from development of Utica Shale in area 15
Leasing & Capital Spend Overview 16
Internal Growth Cosmetic Upgrades Improve overall mall experience, create a sense of place and increase frequency and duration of visits Enhanced Center Court Installed state of the art Wi-Fi from end zone to end zone Upgrade lighting, interior/exterior signage and common area amenities Tablet Bar Create soft seating environments tailored to each mall and market Installed energy management systems to maximize efficiency Completed 3 renovations and commenced 3 during 2013 17
Select Initiatives Wi-Fi Initiative Wi-Fi up and running from endzone to endzone throughout portfolio Maintained ownership of bandwidth to generate income through advertising, sponsorship and retailer access Over 130,000+ unique users have already accessed Rouse Wi-Fi network since rolling installation over the last 90 days, growing our database of club members to communicate with on a regular basis through mall and retailer promotion Nestlé Toll House Café Executed leases for 18 Nestle Toll House cafés to anchor center courts Features gourmet coffee, fresh baked cookies and pastries Partnership with Gordon Ramsay s Production Co. 13 Rouse malls selected to host second season of Food Court Wars, a widely popular Food Network reality series Provides valuable exposure, awareness and advertising for our malls and drive increased traffic throughout our portfolio Cafés will be complemented by new soft seating, and Wi-Fi and serve as a social gathering point for each mall 18
Case Study: Pierre Bossier Mall - Bossier City, Louisiana Before Cosmetic Project Recently completed, included new tile floor, soft seating, painting, children s play area, Wi-Fi, upgraded signage and new exterior mall entrances In conjunction with the renovation, executed 50.6K SF of new leasing, increasing total occupancy by ~730 bps to 96.4% and permanent occupancy by ~790 bps Added 35K SF Forever 21 flagship store, the first in Northwest Louisiana and one of only a handful of new U.S market openings for chain After Opening Spring 2014 19
Case Study: Mall St. Vincent - Shreveport, Louisiana Before Cosmetic Project Commenced renovation to reposition mall as leading retail and restaurant destination in Northwest Louisiana Transformation of outside façade to open and engaging streetscape and addition of interior upgrades and new amenity package Executed agreement with City to reimburse Rouse s costs over time via sales tax sharing Conceptual Rendering 20
Case Study: Chula Vista Center - Chula Vista, California Cosmetic Project Renovation of open-air mall, including new outdoor seating, signage, painting, play areas, water elements, outdoor fireplace and Wi-Fi Signed AMC Theater to open state of art digital megaplex theater Created high-volume restaurant lineup featuring BJ s Restaurant, Buffalo Wild Wings, Red Lobster, Fat Burger and Project Pie Before Historical Sales PSF $400 $400 $349 $350 $310 $296 $294 $300 $282 $250 2009 2010 2011 2012 Sep. 2013 Run Rate(1) (1): Run rate includes sales of tenants open and not yet comparable Increased comparable inline sales by 19% from spin to $349 PSF as of September 2013 After 21
Internal Growth Strategic Capital Tailored business plans at individual asset level to increase occupancy and sales per square foot Re-configure, re-develop and re-tenant vacant anchor spaces Convert excess in-line space to big-box users Bayshore Mall Eureka, CA Completing $8.3 million strategic capital project converting excess inline GLA to new junior boxes Commenced interior renovation including the addition of new flooring, lighting, signage, soft seating and Wi-Fi New major tenants added: Wal-Mart, TJMaxx, Ulta, Sports Authority Add high-volume restaurants, entertainment and everyday uses Site Plan Not speculative, projects generally initiated with signed leases in place Unlevered return of 9-11% on project before multiplier effect on rest of mall 22
Case Study: Lakeland Square - Lakeland, Florida Existing Site Plan AREA OF FOCUS VACANT ANCHOR EXCESS INLINE GLA Strategic Project $13 million reconfiguration of vacant anchor and excess unproductive inline space for Cinemark and Sports Authority In conjunction with addition of two junior anchors, executed 15 new deals totaling over 20K SF, increasing permanent percentage leased by 10.8% Closed a new, ten year $70.0 million mortgage at a fixed rate of 4.17% in March 2013 Proposed Site Plan Conceptual Rendering 23
External Growth Opportunity 24
Platform for B Mall Consolidation Closed over $232 million of acquisitions since formation Opportunistic and strategic acquisitions of dominant malls in protected markets or submarkets Target assets with limited downside and significant growth opportunities by applying Rouse's platform and expertise to improve retailer quality and composition, occupancy levels, NOI and sales productivity metrics Greenville Mall - $50.3 million Mall at Turtle Creek - $96.3 million Grand Traverse Mall - $62.0 million Acquired: July 2013 Only enclosed regional mall within a 40 mile radius Strong inline sales and low occupancy costs Home to East Carolina University, the second largest university in the state with over 27,000 students Off-market transaction from a private partnership Acquired: December 2012 Only enclosed mall within a 75-mile radius Strong inline sales and low occupancy costs One of the last enclosed mall constructed prior to recession Strong/diverse economy driven by healthcare and education Acquired from a private partnership Acquired: February 2012 Only enclosed regional mall within a 100 mile radius Largest shopping center in Northern Michigan Vacation destination with ~5M tourists annually Acquired from special servicer with minimal equity investment 25
Macerich Acquisition Under contract for $292.5 million acquisition of malls totaling 2 million SF Chesterfield Towne Center High growth, affluent submarket with average household income in a five-mile radius of $101,160 serving a trade area of over ~550,000 people South of the natural barrier, James River, main draw for the captive trade area to the south and west The Centre at Salisbury Only regional mall on the Eastern Shore of Maryland and the only enclosed mall in 55 miles serving a 9-county, 330,000 person trade area Chesterfield Towne Center Virginia The Centre at Salisbury Maryland 26
Financial Overview 27
Flexible Capital Structure Capitalization ($ in millions) $188 $48 Term Loan/Revolver Financing Capitalization Accomplishments Closed $451 million of new mortgages since formation, generating net proceeds of approximately $78 million Net Debt: $1,140 Mortgage Debt $1,001 Cash/Short Term Deposits ($ in millions) $500 West Valley Mall $400 59 NewPark Mall Valley Hills Mall 72 Lakeland Square Mall Equity $1,022 $300 $200 68 70 Animas Valley Mall Southland Center Pierre Bossier Mall 52 $100 79 Liquidity ($ in millions) Cash and Short-Term Deposits (1) $48 Undrawn Revolver (2) 150 Subordinated Debt Facility (3) 100 Total Liquidity $298 78 52 $- Mortgage Debt Net Proceeds Note: Proceeds are shown net of transaction fees and closing costs. (1) Cash and short term deposits as of September 30, 2013 (2) $150M Revolver. As of September 30, 2013, the Revolver was undrawn. (3) $100M Subordinated Revolver. LIBOR is subject to floor of 1.0%. As of September 30, 2013, the Subordinated Revolver was undrawn. (4) Equity based on 49,642,000 shares outstanding and closing stock price of $20.58 as of September 30, 2013. 28
Debt Profile Debt Profile Seven securitized mortgages ($399M) are freely prepayable at par providing optionality Ability to release malls securing term loan and refinance as NOI improves Annual amortization will contribute to balance sheet deleveraging Highlights Average interest rate improved to 4.98% from 5.55% as of the spin date Average debt maturity extended to 4.21 years from 2.93 years as of the spin date $500,000 ($ in thousands) Spin 9/30/2013 $400,000 $300,000 $200,000 $100,000 $0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 29
Summary National Platform with Focus on Market-Protected Malls Favorable Industry and Economic Trends Strong Internal Growth Prospects Proven External Growth Opportunity Experienced Management with Value-Add Track Record Flexible Capital Structure 30