The Property Business Plan & Implementation€¦ · - our plan for today - part i: why a property...

The Property Business Plan &

Implementation__________________________

Action Plan for Maximum Value

Yaromir Steiner & Beau Arnason

Steiner + Associates

Columbus, OH USA

April 2013

- Our Plan for Today -

Part I: WHY A PROPERTY BUSINESS PLAN?

Part II: WHAT IS A PROPERTY BUSINESS PLAN?

Part III: THE CONTENTS OF A PROPERTY BUSINESS PLAN

Part IV: MARKETING OF ASPIRATIONAL ENVIRONMENTS

Part V: THE MARKETING AND COMMUNICATIONS PLAN

PROPERTY BUSINESS PLAN SAMPLE PROJECT – Easton Town Center

We will study today:

a. How to prepare a Property Business Plan

b. The impact of new trends on management

Part I

WHY A PROPERTY BUSINESS PLAN?

What is the purpose of any Business Plan?

(shopping center or not!)

The purpose of a business plan:

a. To set the objective of the enterprise

Part I: Why A Property Business Plan?

The purpose of a business plan:

a. To set the objective of the enterprise

b. To synchronize the efforts of the team members

• Getting out of the Jungle

• Laser Beam


What is the purpose of a Property

Business Plan?

Any difference?

Do all types of shopping centers need a

business plan?

Could you categorize shopping centers ?

Methods for categorizing:

a. Types of shopping: “Need” based vs. “Want” based




b. Types of trips: necessity vs. discretionary





c. Types of retailers: commodity vs. specialty






d. Types of Environments: functional vs. aspirational






d. Type of Environments: functional vs. aspirational

Two general categories of centers emerge:

• Convenience centers

• Aspirational centers

However the boundaries are not clear……..


Convenience Centers as distribution nodes of necessity:

• Need based trips – functional, proximity, price sensitive

• Basic needs spending

• Easy local access

• Functional designs

• Cost based economics

for its owners, unless…

barriers to entry!


Aspirational Centers as experiental environments

• Want based trips – aspirational, regional, less price sensitive

• Basic and discretionary spending

• Regional access

• Aspirational designs

• Sales based economics

for its owners


Similar goods can be sold in “Need” or “Want” driven

environments: Best Buy/Apple, Dressbarn/H&M, Aldi/Trader

Joe’s


Most regional retail environments have lost their

aspirational nature due to poor tenant mix and inadequate

configurations


CONCLUSION

The creation and implementation of a

Business Plan is essential for Aspirational

projects. For Convenience projects, it is

primarily a financial exercise.

Part II

WHAT IS A PROPERTY BUSINESS PLAN?

What is the purpose of a Property

Business Plan….

The purpose of a property business plan:

a. To define the objective of the property

b. To synchronize the strategies of the property management team

Who prepares the Property Business Plan?

Do you have one?

Who prepares it?

a. The owner

b. The general manager

A property business plan is not prepared and

imposed by:

It is a team effort.

Building consensus and ownership is critical.

Part II: What is a Property Business Plan?

Why is building consensus and

coordination important?….

a. Renovations:

• when

• priority list

• level of finishes

• design

b. Leasing:

• extensions or replacement

• renovation or maximum rent

Why is building consensus and coordination

important:


What are the contents of a Property

Business Plan?

a. The Objective of the management team

A property business plan contains:


a. The objective of the management team

b. Implementation strategies for:

i. Operations

ii. Communication and Marketing

iii. Leasing

iv. Construction and Development



a. The objective of the management team

b. Implementation strategies for:

i. Operations

ii. Communication and Marketing

iii. Leasing

iv. Construction and Development

c. Operating budgets and cash flow projections



The Business Plan preparation

cycle is 2-3 months….

a. Ownership sets objectives

b. Management prepares the Plan

c. Ownership approves the Plan

d. Management implements the Plan

e. Management monitors variances and reforecasts

f. Ownership resets objectives

The business plan preparation cycle is 2-3 months:


The contributors to the Business Plan preparation are….

a. The owner

b. The portfolio manager

c. The property general manager

d. The accounting department

e. The leasing department

f. The marketing department

g. Research data

The contributors to the business plan preparation are:


Part III

THE CONTENTS OF A PROPERTY

BUSINESS PLAN

The table of contents of the

business plan….

a. The executive summary

b. The objective of the business plan

c. The underlying analysis

d. The implementation strategies

e. The action plan

f. The financial projections

The table of contents of the business plan:

Part III: The contents of a Property Business Plan

The Business Plan

Executive Summary

The Business Plan: Executive Summary


a. It is a high-level 1-2 page summary of the

business plan.

b. It will focus on the objective, the value maximization

strategies, and the expected financial performance.

The Business Plan

The Objective

a. The business plan should only have one objective

b. The consensus is more important than comprehensiveness

c. The business plan’s objective may be a narrower focus than

the owner’s overall objective for the asset


The Business Plan: The Objective

Examples of property objectives….

a. Easton Town Center in Ohio

Examples of property objectives:


To increase the value of Easton

Town Center by 30% over the next

five years by increasing Net

Operating Income. Net Operating

Income will be increased through

the combination of higher

revenues and lower costs.

The Business Plan

The Underlying Analysis

a. It is the rational basis for the decisions

b. It helps build team consensus about facts

The Business Plan: The Underlying Analysis


It provides the informational background upon

which the strategic decisions are based.

The underlying analysis may include….

a. Financial summary of past performance:

i. Previous years operations: actuals vs. budgets

ii. History of debt write-offs

iii. Capital expenditures: maintenance vs. investment

iv. Tenant sales history

v. Occupancy costs to sales ratios

vi. Customer traffic history

vii. Example from Easton Town Center, Ohio

The underlying analysis may include:



Example: Tenant Sales History and Occupancy Ratios


Example: Traffic Counts

Easton Town Center Traffic Count 1/2/20112010 2010 2010 2009 2009 2009

Date Day Significant Events

South

District

Count

North

District

Count

Total Traffic South

District

Count

North

District

Count

Total Traffic

11/29/2010 Mon 15,431 15,566 30,997 14,287 14,382 28,66911/30/2010 Tue 16,280 16,391 32,671 15,391 15,459 30,85012/1/2010 Wed 16,491 16,744 33,235 15,273 15,074 30,34712/2/2010 Thu 16,300 16,505 32,805 15,768 15,638 31,40612/3/2010 Fri 19,281 19,494 38,775 18,934 18,696 37,63012/4/2010 Sat 20,509 20,545 41,054 19,566 18,390 37,95612/5/2010 Sun 16,168 16,470 32,638 15,688 15,703 31,391Weekly Total 120,460 121,715 242,175 114,907 113,342 228,249

12/6/2010 Mon 15,284 15,642 30,926 13,587 13,228 26,81512/7/2010 Tue 16,379 17,633 34,012 14,696 15,883 30,57912/8/2010 Wed 16,738 17,691 34,429 15,337 15,867 31,20412/9/2010 Thu 19,780 19,873 39,653 18,719 19,527 38,246

12/10/2010 Fri 23,597 26,841 50,438 21,679 25,589 47,26812/11/2010 Sat 24,421 24,804 49,225 22,300 22,915 45,21512/12/2010 Sun 19,081 20,696 39,777 18,327 19,644 37,971

Weekly Total 135,280 143,180 278,460 124,645 132,653 257,29812/13/2010 Mon 23,551 23,797 47,348 22,478 22,688 45,16612/14/2010 Tue 24,225 25,696 49,921 23,700 24,791 48,49112/15/2010 Wed 27,302 28,300 55,602 26,821 27,055 53,87612/16/2010 Thu 28,713 29,401 58,114 25,663 27,273 52,93612/17/2010 Fri 28,477 36,594 65,071 26,973 35,855 62,82812/18/2010 Sat 33,194 35,844 69,038 31,418 34,173 65,59112/19/2010 Sun 28,681 29,460 58,141 26,868 28,830 55,698

Weekly Total 194,143 209,092 403,235 183,921 200,665 384,58612/20/2010 Mon 23,712 24,630 48,342 22,491 22,688 45,17912/21/2010 Tue 24,488 24,853 49,341 23,774 24,050 47,82412/2/2010 Wed 27,744 28,055 55,799 25,980 25,826 51,806

12/23/2010 Thu Chrismas Day 2008 27,886 28,539 56,425 26,840 26,601 53,44112/24/2010 Fri Chrismas Day 2009 28,768 29,450 58,218 6,611 8,108 14,71912/25/2010 Sat Chrismas Day 2010 8,590 7,740 16,330 25,307 25,800 51,10712/26/2010 Sun 27,876 28,225 56,101 19,491 20,656 40,147

Weekly Total 169,064 171,492 340,556 150,494 153,729 304,22312/27/2011 Mon 19,425 19,753 39,178 17,645 18,855 36,50012/28/2011 Tue 22,460 21,866 44,326 19,546 20,210 39,75612/29/2011 Wed 21,296 20,527 41,823 17,516 17,339 34,85512/30/2011 Thu New Years Day 2009 21,497 20,863 42,360 18,477 19,579 38,05612/31/2011 Fri New Years Day 2010 21,791 21,530 43,321 12,307 12,371 24,678

1/1/2011 Sat New Years Day 2011 20,786 20,477 41,263 19,792 20,551 40,3431/2/2011 Sun 17,088 18,397 35,485 13,897 14,370 28,267

Weekly Total 144,343 143,413 287,756 119,180 123,275 242,455

YTD 2010 5,699,918 5,725,613 11,425,531 5,614,048 5,581,583 11,195,631

a. Financial summary of past performance

b. Physical condition of the property:

i. Three year look forward of required replacements

ii. Annual reserve calculations based on age and replacement costs (too conservative!)




b. Physical condition of the property

i. Three year look forward of required replacements

ii. Annual reserve calculations based on age and replacement

costs (too conservative!)

c. Site data: floor plans, status of entitlements, governmental

regulations, infrastructure modifications





c. Site Data

d. Trade area definition: a very significant component of financial

projections

i. Based on research: property intercepts vs. overall market,

importance of sampling

i. Trade area contains 70-75% of the shoppers

ii. Trade area household incomes

iii. Key parameters: population growth, income growth

iv. Examples from Easton Town Center, Ohio




Easton Demographics

Easton Trade Areas



c. Site Data

d. Trade area definition

e. Customer profile: the foundation of merchandizing and

leasing decisions

i. Center customer vs. trade area comparisons

ii. Expenditures per age segments

iii. Expenditures per fashion preferences

iv. Example from Easton Town Center, Ohio



Easton Town Center: Intercept Study Market Identification


Source: August Partners

Easton Town Center: Expenditures per Age & Income



Age SegmentsAll Shoppers

%Trade

Area %

Shopper Segment

RDI

Average Center Spend

Center Spend Share

Avg. Annual Apparel Spend

Annual Apparel Spend Share

12-17 15.7% 9.7% 1.6 $59 9.7% $971 14.0%

18-24 27.7% 11.5% 2.4 $86 25.1% $1,151 29.3%

25-34 19.0% 17.3% 1.1 $93 18.6% $1,214 21.2%

35-44 13.2% 17.6% 0.8 $102 14.1% $1,187 14.4%

45-54 12.4% 17.3% 0.7 $138 18.0% $997 11.3%

55-64 7.7% 13.2% 0.6 $114 9.2% $998 7.1%

65+ 4.1% 13.4% 0.3 $126 5.4% $750 2.8%

$95 $1,093

HH Income Segments

<$35K 27.3% 33.1% 0.8 $69 19.7% $925 22.2%

$35K-$49,999 15.0% 15.0% 1.0 $70 11.0% $1,150 15.1%

$50K-$74,999 17.3% 19.7% 0.9 $94 16.9% $1,127 17.1%

$75K-$99,999 14.1% 13.0% 1.1 $93 13.7% $1,057 13.1%

$100K-$149,999 11.9% 12.1% 1.0 $128 15.8% $1,244 13.0%

$150K-$249,999 9.5% 5.1% 1.9 $153 15.2% $1,420 11.8%

$250K+ 4.9% 2.0% 2.5 $159 8.1% $1,785 7.7%

Avg. HH Income $85,337 $70,093

Shopper Fashion Stance – Shopper Intercept Survey

Shopping Frequency

Annual Apparel Spend

% of Annual Apparel Spend at

ETC

Monthly Dining-Out

Spend

% of Monthly

Dining-Out Spend at

ETC

Unconcerned with Fashion 4.8% 4.7 $421 15.6% $50 11.0%

Aware of Fashion, Don’t Care 16.1% 5.8 $680 27.1% $175 17.8%

Mainstream-Conservative 33.0% 6.2 $973 35.2% $376 18.9%

Moderates 53.9% 6.0 $836 31.1% $287 17.9%

Trendy 38.7% 7.7 $1,367 45.4% $626 23.0%

Cutting Edge 7.4% 8.3 $1,699 44.4% $876 25.8%

Fashion Forwards 46.1% 7.8 $1,419 45.3% $665 23.4%

Shopping Patterns

Fashion Forwards = 47% of shopper composition, but generate 54% of shopper visits.

58


Easton Town Center: Propensity to Spend vs. Fashion Stance


f. Competitive analysis:

i. Critical in saturated markets

ii. Do not underestimate competition

g. Retail and leasing trends:

i. The tenant mix must remain relevant to the trade area

ii. Do you know the ascending retail brands?

h. Space allocation and merchandize mix:

i. Key measure: occupancy cost to sales ratio

ii. Space allocation vs. similar projects

iii. Merchandize mix vs. market needs



The Business Plan

The Implementation Strategies

The Business Plan: The Implementation Strategies


This is the most important part of the property business plan.

Example: second world war objective and strategies

The management team identifies the key strategies to implement the

owner’s objective….

Key strategies to implement owner’s objective:


a. No meaningless words: best property, all customers, etc.

b. Multi-year perspective is preferable

c. One to three strategies is good, more than five is wrong

The Business Plan

The Action Plan

The Business Plan: The Action Plan


This is the where the ideas become a series of identified

implementation tasks with….

Ideas become series of identified implementation

tasks with:


a. An identified completion criteria



b. A timeline for implementation


tasks with:




c. A budget


tasks with:




c. A budget

d. A person responsible for execution


tasks with:

The action plan organizes the tasks

in the different areas of

responsibilities:

leasing

property improvements

maintenance

cleaning

security

When scheduling completion target

dates it is preferable to stagger full

completions over time instead of

pushing all tasks simultaneously.

The Business Plan

The Financial Projections

The Business Plan: The Financial Projections


The financial projections summarize the financial

consequences of the action plan.

They combine….

Financial projections combine:


a. Cash flow from operations

b. Capital Expenditures

Property accounting is mostly a cash

base accounting and does not follow

generally accepted accounting

principles (GAAP) during the course

of the year.

Property accounting, however,

segregates the data to allow the

production of periodic financial

statements following GAAP.

Part IV

MARKETING OF ASPIRATIONAL ENVIRONMENTS

Traditional marketing focuses on

persuasion, on acquiring the customer.

But to keep the customer, the most

powerful opportunities for influencing

a brand occur during consumption.

Experiential marketing is about delivering

experiences that are fulfilling the life

aspirations of the customer.

Part IV: Marketing of Aspirational Environments

Bayshore Town Center, Glendale WI

An aspirational shopping environment

is not in the distribution of goods

business, but rather delivers

experiences that makes it become part

of its customers lives.

Easton Experiences: Annual Programming Calendar

JANUARY FEBRUARY MARCH

The Great Guinness Toast at Fado: 2/18 Fado St. Patrick's Day Party: 3/16-3/19

APRIL MAY JUNE

Lucky Brand Event: 4/2 Easton Job Fair (Hilton): 5/4 Summer Concert Series: Wednesdays

Easton Bunny: 4/8-4/23 Mother's Day Photos: 5/8 Farmer's Markets: Thursdays

Evening of Hope: 4/9 Race for the Cure Registration: 5/11-5/13 Fitness Yoga on the Square: Fridays

Earth Day Celebration: 4/30 Pinnell Dance Performance: 5/13 Family Busker Series: Weekly

Celebration for Life: 5/21 Sailing at Central Park Fountain: Weekends

Lung Walk: 6/4

“Follow Me!” Fun Fit Family Day: 6/11

Easton Art Affair: 6/24-6/26

Kids Corner: 6/26

JULY AUGUST SEPTEMBER

Columbus Zoo Appearances: Tuesdays Columbus Zoo Appearances: Tuesdays Farmer's Markets: Thursdays

"Follow Me!" Summer Series: Tuesdays "Follow Me!" Summer Series: Tuesdays Ohio Proud Fall Harvest: 9/10

Movies by Moonlight Series: Tuesdays Movies by Moonlight Series: Tuesdays

Summer Concert Series: Wednesdays Summer Concert Series: Wednesdays

Farmer's Markets: Thursdays Farmer's Markets: Thursdays

Fitness Yoga on the Square: Fridays Fitness Yoga on the Square: Fridays

Family Busker Series: Weekly Family Busker Series: Weekly

Sailing at Central Park Fountain: Weekends Sailing at Central Park Fountain: Weekends

Kids Fest: 8/6

OCTOBER NOVEMBER DECEMBER

“Follow Me!” Healthy Harvest: 10/16 Once Upon a Night: 11/12

CAHS HOWLoween Pet Parade: 10/23


Easton Experiences: Summer Events Brochure


Easton Experiences: Communications


Easton Experiences....


Easton Experiences….


Easton Town Center: Perceptions


Mall #2

Mall #1

Easton Town Center

Numbers in circles = 90-day shopping frequency




Mall #1

Easton Town Center

Mall #2

Numbers in circles = 90-day shopping frequency



Favorite Center - Property/General Reasons

72.1%

40.1%

35.8%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Easton/ETC List

Polaris/ETC List

Tuttle/ETC ListF

avo

rite

Cen

ter:

ET

C L

ist

So

urc

e

Enjoy ShoppingEnvironment

Easy/Convenient toShop

Ease of Parking

Safety/Security

Entertainment Options

Special Events


Mall #1/Etc List

Mall #2/Etc List

Easton/ETC List



Net Promoter Score Comparisons

75.6%

20.8%

-34.6%

-60%

-40%

-20%

0%

20%

40%

60%

80%

Easton Town

Center

Polaris Fashion

Place

Mall at Tuttle

Crossing

Net Promoter ScoreETC Shopper List

Among its own shopper group –

represented by the ETC List

respondents – the center

achieved a stellar 75.6%, putting

it in league with Apple (78%)

and ahead of such stalwarts as

Trader Joe’s (68%) and

Facebook (65%).

92




Mall #1 Mall #2

Greene Town Center: Experiences

Gin Blossoms Concert Crowd

Sister Hazel Concert Crowd


The Greene Town Center: Experiences

Christmas Tree Lighting Ceremony - Video


Steiner Community Foundations



Community Foundation Scholarships

You study. We pay.

Mentorship Program

You lead. We help.

Youth Advisory Council

You speak. We listen.

Ambassadors

You need. We provide.



Evening of Hope

The Center for Child & Family Advocacy

Celebration for Life

The OSUCCC Arthur G. James Cancer Hospital and Richard J. Solove

Research Institute

Once Upon a Night

Nationwide Children’s Hospital

Cornerstone Event Partnerships


Part V

THE MARKETING &

COMMUNICATIONS PLAN

The marketing and communication

plan deserves special attention:

It will have its own objective,

strategy, and action plan.

Part IV: The Marketing & Communication Plan

The marketing of shopping centers is the one

area of property management that will be

significantly impacted by the rise of the

internet commerce and social media.

The impact of the internet and

smart phones includes….

The impact of the internet and smart phones include:

a. Alternative distribution system

b. Powerful transparency tool

Part IV: The Marketing & Communication Plan

CONCLUSION

In the age of the internet and smart phones,

to remain relevant, the aspirational shopping

centers must become experiential

environments that fulfill the existential

aspirations of their customers.

Property Business Plan Sample Project

- Easton Town Center -

Owner’s Objective (“the challenge”)

Increase the project value by 30% over five years by

increasing Net Operating Income.

Net Operating Income will be increased through the

combination of higher revenues and controlling costs.

Management’s Operating Strategy

The owner’s objective will be achieved by implementing

a Strategic Plan to:

A. Increase tenant sales

B. Control operating costs


Increases in tenant sales will be achieved by:

A. Bringing New customers to the center

B. Bringing Current customers back more frequently

C. Bringing Current customers into more stores each

visit


Operating costs will be controlled by:

A. Ensure spending is prioritized and aligned with the

operating strategy

B. Improve efficiency by reducing consumption and

purchasing costs

The Strategic Plan

A. Research

B. Performance Metrics

C. Initiative Evaluation

The Strategic Plan

Research

A. Customer Understanding

1. Surveys

2. Focus Groups

3. Market Penetration

4. Demographic Analysis

Shopper Intercept SurveyCategory

SHOPPING PATTERNS

Average # of Visits in Past 90 Days 6.8

Average Travel Time (minutes) 33

Average Length of Visits (minutes) 96.9

Average # of Stores Visited 3.8

Average # of Stores Made Purchase In 1.9

Buyer Conversion Rate 50.0%

Average Center Expenditure $95

Completed Shopping Trip $102

Non-completed Shopping Trip $91

Average Food/Drink Expenditure $9

Completed Shopping Trip $10

Non-completed Shopping Trip $8

Average Annual Apparel Spend $1,093

% of Apparel Expenditure at Easton 37.7%

Average Monthly Dining Out Spend $491

% of Dining Out Expenditure at Easton 20.5%

Net Promoter Score (% rating) 82.5%

SHOPPER TRAFFIC/DEMOGRAPHICS

% Residents (living within 50 miles) 79.7%

% Day-Trip Visitors (more than 50 miles) 13.0%

% Overnight Visitors 7.3%

% Working in Nearby Area 21.5%

Average Age 32.7

<35 Age 62.5%

35+ Age 37.5%

% Females 74.3%

Average Household Income $85,337

<$75K HH Income 59.6%

$75K+ HH Income 40.4%

$100K+ HH Income 26.3%

"Fashion Forwards" 46.1%

Vital Statistics

111Source: August Partners

Shopper Intercept Survey

112


Brand Perceptions

Shopper Perceptions

113


Brand Perceptions

What Would it Take to Generate More Frequency?

114


Inreach Marketing – More Store Visits

Implications & Actions

115


The Strategic Plan

Research

B. Property Understanding

1. SWOT Analysis

STRENGTHS OPPORTUNITIESA. Location

▪ Regional Access ▪ Market to wider area re: convenience of access

▪ Proximity to the Airport ▪ Advertise more at the airport hotels

▪ Promote coupon book at the airport

B. Physical Environment

▪ Open Feeling ▪ Focus on bathrooms improvements

▪ Station Building needs a face lift

▪ Inviting Common Areas ▪ Change Experience Columbus & news stand, guest serv

▪ CCAD paint murals and bring in sculptures (scholarship)

C. Emotional Connection

▪ Collection of Memories ▪ Tap into memories via Facebook, etc

▪ Community Involvement ▪ Broaden connection with community (arts, rethink ECF)

▪ Put signs up in schools regarding scholarship

D. Offerings

▪ Tenant Mix - breadth & leisure time ▪ Communicate tenants especially unique offerings

▪ Direct Tenant Access ▪

▪ Amenities and Services ▪ Enhance the amenities and services

▪ Animation ▪ Focus on big events to see if we should eliminate some

of the smaller events

WEAKNESSES THREATS MITIGATIONA. Location A. Location A. Location

▪ Lack of nearby Residential ▪ Vulnerable life span ▪ Develop master plan for area to add permanence

▪ Surrounding Neighborhoods ▪ Actual and perception of safety ▪ Active involvement in neighborhood improvement and schools, etc.

B. Physical Environment B. Physical Environment B. Physical Environment

▪ Outdoor Elements ▪ Lose customers who don't brave elements ▪ Add refuge areas (permanent and temporary) and amenities

(hand warmers, etc.)

C. Emotional Connection C. Emotional Connection C. Emotional Connection

▪ Interaction w/Youth ▪ Perception of safety concerns due to youth ▪ Expand AMC offerings; improve parental escort policy enforcement

▪ Vulnerable to incident (shooting/knife) ▪ Emphasize family and safety attributes; keep crisis plan current

D. Offerings D. Offerings D. Offerings

▪ Parking Experience ▪ Lose Customers ▪ Build more, improve experience

▪ Lack of Unique Restaurants ▪ Perception of blandness ▪ Add Target tenants

EASTON TOWN CENTER

STRATEGIC PLAN - PARTIAL EXAMPLE -

The Strategic Plan

Performance Metrics – Increased Sales

A. Identify External Factors on Sales

1. Inflation: @ 2.5% per year

2. Trade Area Growth: @ 1.1% per year

3. Share of Market GLA

4. Center Expansion

5. On Line Sales Impact

The Strategic Plan

Performance Metrics – Increased Sales

B. Establish Overall Target Increases

1. New customers: 5% (@ 40,000 distinct visits)

2. Current customer frequency: 5.5% (@ 1.5 trips / year)

3. Current customers store visits: (@ .2 more stores / visit)

The Strategic Plan

Performance Metrics – Controlling Costs

A. Expense Prioritization Process

Account Acct Desc. Reduction Opportunity Description

Management Expenses

5031-000 Office Supplies Convert portion of letterhead use to electronic $2,000

5098-000 Misc Admin Eliminate battery recycle program $1,800

5010-000 Equipment Office Convert fax line to electronic only and eliminate machine $1,520

5032-000 Postage & Delivery Send all vendor payments electronically $1,500

Operations Expenses

Strategic Planning Maintain new seating, expand BTE, pursue convention, lunch shuttle $85,000

5192-000 Landscaping Leave tree pits in place $75,000

5192-000 Landscaping Reduce winter foliage program by 50% $50,000

Security Expenses

5405-000 Security Payroll Eliminate 2 F/T Officers $80,000

5405-001 Security Payroll Eliminate 2 adt'l F/T Officer $80,000

Guest Services Expenses

5731-000 Supplies Equipment Eliminate umbrella program $76,000

5760-000 Gift Cards / Promos Eliminate all gift card collateral / packaging $45,500

Marketing / Animation Expenses

Strategic Planning Communication: Target state advertising,manage new signage & direct. $197,000

7071-000 Advertising Reduce advertising by 50% $132,890

Strategic Planning Personalized mktg: comp photos, tenant events, gift card promos $120,000

Strategic Planning Events: series type events and tradition making $90,000

Owners / Non-controllable Expenses

Strategic Planning Personnel: additional staffing for initiative implementation $80,000

8034-000 Owners Reduce Charitable contributions $75,000

8034-000 Owners Eliminate Kallner retainer allocation $30,000

Total $1,300,283 $908,957 $80,000

Cumulative $2,209,240 $2,289,240

Level 1 Impact of reduction is reversible in the short term

Level 2 Impact of reduction has a longer correction period

Level 3 Impact of reduction is potentially irreversible

Easton Town Center, LLC

2012 Budget

Expense Reduction Opportunity Analysis 11/18/11

Level 1 Level 2 Level 3

Reviewed as Opportunity on 11/23

- PARTIAL EXAMPLE -

The Strategic Plan - Review

A. Research ��

B. Performance Metrics ��

C. Initiative Evaluation

The Strategic Plan

Initiative Evaluation (over 90 created)

A. Categorized by Area of Impact

B. Alignment with Operating Strategy

C. Prioritized by Cost (Capital and Operating)

D. Prioritized by Potential Impact on sales

Bold denotes completed/underway item Capital Operating Priority Category

Initiative * Denotes cost covered in regular operating budget Cost Costs

Utilize billboards along I-70 and I-71 major metro areas outside CMH $0 $120,000 1 A

Feature new tenants on local billboards $0 $40,000 1 A

Develop new LCD screen program throughout property $500,000 $25,000 1 A

Improve directional signage: stores, garages $250,000 $2,500 1 A

Utilize pole banners to feature new tenants $0 $5,000 1 A

Increase number of freestanding directories, immediate area focus $80,000 $2,500 1 A

Accommodate new tenant stanchion signage/racks re offers $75,000 $2,000 1 A

Improve garage parked car location signage $75,000 $0 1 A

Highlight new tenants on directories on site * $0 $0 1 A

Utilize vacant storefronts for new tenant announcements, events * $0 $0 2 A

Revise wing tenant signage options * $0 $0 2 A

Add new blade signage to identify passage tenants * $0 $0 3 A

Subtotal $980,000 $197,000

Add additional space capacity - New Decks * $0 $0 1 B

Improve overall restroom experience (Station Building) * $500,000 $0 1 B

Add more soft seating areas, especially indoors $125,000 $5,000 1 B

Add additional space capacity - Existing Decks, Lots * $0 $0 1 B

Improve interstate 270 ingress / egress $0 $0 1 B

Overhaul holiday decor program * $500,000 $0 2 B

Provide an enclosed play area for children $250,000 $15,000 2 B

Install space indicator light system in decks $800,000 $10,000 2 B

Create a men's club / 'guy zone' lounge area $150,000 $10,000 3 B

Create a refuge space from the weather on the North side $75,000 $15,000 3 B

Subtotal $2,400,000 $55,000

Provide daily lunch time shuttle to major neighboring employers $0 $40,000 1 C

Modify Parental Escort Policy / Code of Conduct procedures * $0 $0 1 C

Enhance presence of Ambassadors via deployment, uniforms * $0 $0 1 C

Easton Town Center

Strategic Plan to Increase Project Value

Initiative Prioritization - Sales Increase- PARTIAL EXAMPLE -

- PARTIAL EXAMPLE -

Amount of Capital and Operating Costs that can be spent per increase in sales:

Sales Increase $1,000

Percentage to Apply to Rent 12% (15% o/cost less taxes)

Tenant Rent Income $120

Rent Impact Adjustment for Time 50% (mid pt of 10 yr term)

Adjusted Tenant Rent $60Tenants Impacted 64% (excludes dept stores, restaurants)

Final Tenant Rent Income $39 3.87%

ETC Required Return on Cost 15.00%

Maximum Allowable Capital Spend $258 ($39 noi / 15%)

Conclusion:

Max Capital Spend as % of Sales Increase 25.80%

Cap Rate Estimate 6.00% 40.0%

Maximum Allowable Operating Spend $15.48Conclusion:

Max Operating Spend as % of Sales Increase 1.55%

Easton Town Center

Strategic Plan to Increase Project Value

Initiative Prioritization - Sales Increase

The Strategic Plan

Sample Initiatives for Implementation

Bring New customers to the center

A. Organize new tradition building events

- Fashion’s Night Out / Chalk the Block

B. Implement new weekly series / event

- Farmer’s market

Fashion Night Out

Farmers Market

Chalk the Block

The Strategic Plan


Bring New customers to the center

C. Establish relationship with Arts / Downtown community

- CCAD relationship

D. Reinforce position as high-end fashion center

- Advertising campaign

The Strategic Plan


Bring Current customers in to more stores each visit

A. Increase awareness of new tenants

- Highlight new tenants on directory signage

- Utilize vacant spaces as signage

B. Provide more awareness of all tenants

- Install more wall mounted directories

- Install dining guides

Shopping Tommy Bahama ........ ..... ... .. U True Religion op&'"'gs..,., ... ., ... R

J.Crew ............ ........................ H J.Jill .. ................ ......................... Q

Me;n's Ap;parel Women's Apparel Kat·e Spade .... ............... , ......... V

Lacoste .... ........ ........................ E Abercrombie & Fitch ..... ..... L 1 Abercrombie & Fitch ........ L 1 Lady Foot Locker .............. l 1 Aeropostal·e .... ,. ............. ..,. ..... M Aeropostale ................ ...... ., ... M Lane Bryant..... ...................... W American Eagle ............ L 1, L2 American Eagle .. ........ .. L 1, L2 The Limit·ed ................... , ....... , .. M Banana Republic ............. ..... E Ann Taylor opoe.o;119 spJfit9 ..... .. ,. .. W LOFT ........ ........ ......... ........ ...... .. U Buckeye Corner··············· -· L2 Anthropologie ......... .,.. ..... , .. ... V Louis Vuitton ....................... W Buckle ......... ......... _. .... _...... ... L 1 Arden B . ..... . ,.,. ...... ,.,. .............. .,. W lululemon ...... .............. ., ....... .. N Burberry .... ,. ....... ,. ................ ..... V Banana Republic ................ .. E Madewell ...... ................. ...... .. .. V Coach ......... ............................. X Buckeye Corner .. ........ ........ L2 Michael Kors .. ........................ U Eddie Ba,uer .... ,. ............. ""' ...... Q Buckle .... ................................ L 1 N'ew York& Company ...... W Express Men .......................... R Burberry ........ ........ .............. .,. .. V The North Face . .,.. ........ _. ... L 1 Foot Locker....................... ... L 1 C. Wonder apet>iJt9s"'""'"' ..... ,. .. R Forever XXI .......................... L 1 Cache ._. ................................. .. U Gap ..... ........ ........................ ... L1 Chico's .......... ..... ... ........ ...... ., ... H Talbots H&M ........... ........ ,........... L 1, L2 Coldwater Creek ............. , ... .. M Hollister Co . ..................... ... L2 dELiA*s .................................. L 1 Homage ..... ......................... AA Eddie Bauer ....... ,. ..... .,.. ..... ... .. ,q Hot Topic. .. ........................... L1 Express ........... ....... ., ................ ,. .. R J. Crew ....... ............................. H Forever XXI .. ................ ........ L 1 Jos. A. Bank Clothiers ........ V Francesca's Collections .. L 1 Lacoste ............... ..................... E Gap ........ ........ ........................ L 1 Louis Vuitton .. ,. ................... W H&M .............................. L 1,l2 lululemon ........ ,. ................ ..... N' Holl ister Co ......... ................ L2 Men's Wearhouse & Tux .... C Homage ...... ........ ........ ...... AA The North Face ....... _. ........ L 1 Hot Mama O!J~.,splill9 ..... ,. DD PacSun ........ ....................... ... L 1 Hot Topic ...................... ........ L 1

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The Strategic Plan


Bring Current customers back more frequently

A. Remind customers of upcoming events / openings

- Install LED signage

B. Provide a more comfortable guest experience

- Install additional seating areas

- Implement fast break lunch offer

C. Implement new Social Marketing Program

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Co·moect·llit, t.s! O

Lessons Learned: Year 2 of 5

1. Even small changes can have a big impact

2. Aligning expenses with the operating strategy reduces

costs

3. Decision making for team members is easier

("method to the madness")

If you want to remember only 4 things from this class:

1. Understand the difference between “need” based shopping

(convenience centers) and “want” based shopping (aspirational

centers).

2. A comprehensive Business Plan is a sin qua non operational

requirement for an Aspirational Center. Otherwise, a primarily

Financial Plan is sufficient.

3. Develop a one sentence objective, three one sentence strategies, and

an action plan with accountability and timeline.

4. Business Plan is to create focus and consensus for the team.

- THANK YOU -

The Property Business Plan & Implementation€¦ · - our plan for today - part i: why a property...

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