Opportunities in Laredos pp Retail Real Estate

September 19, 2012

Why Laredo Is a Great Real Estate Market

Great local Hispanic population
Hispanics are a marketers dream

Customer base is supplemented by millions crossing the border to shop Local economy is getting stronger
Retail sales are increasing Lower unemployment than other markets

The Majority of Laredos p p Population Is Hispanic

5%

Hispanic Non-Hispanic 95%

Source: Synovate 2010

Laredo is the Most Hispanic City in U.S.

Top 10 Markets by Hispanic Population - 2010
Rank 1 2 3 4 5 6 7 8 9 10 Market Laredo Harlingen/Weslaco/Brownsville/McAllen El Paso Yuma/El Centro Corpus Christi San Antonio Fresno/Visalia Palm Springs Bakersfield Miami/Ft. Lauderdale
Source: Synovate 2010

Hispanic % 95% 88% 78% 65% 58% 54% 51% 46% 46% 45%

Latinos are a Marketers Dream

The 3 Ls:
Large population Lucrative Loyal

U.S. Latino Population is Exploding

Latino Population in Millions 63.9 56 50.5 43.5 35.3

2000

2004

2010

2015

2020

Source: Synovate 2010 /U.S. Census Bureau

A Country Within a Country

50.5 million Latinos in U.S. Mexico U.S. Spain Colombia Argentina Peru Venezuela Chile 115.0 MM 50.5 MM 47.0 MM 45.2 MM 42.2 MM 29.5 MM 28.0 MM 17.1 MM

Source: Census 2010 & CIA World Factbook, July 2012

More Latinos than Canadians in Canada!

50.5 Million Hispanics

One in six U.S. residents is Latino

Source: 2000 U.S. Census

Among Children Children, 1 in 4 is Hispanic

Every 30 seconds, a Latino turns 18 in America

Source: NPR, Latino Mayor May Be A Glimpse Of Things To Come, December 12, 2010

Hispanics Driving Growth

More than half of the growth in the total U S U.S. population between 2000 and 2010 was because of the increase in the Hispanic population
A 43% Increase from 2000

M More growth f th from births bi th than immigration

Hispanic Population Explodes

Th 2010 Hi The Hispanic population count exceeded i l ti t d d the Census projections by 1 million Growing 4X faster than the total population

A Population Trend that Cant Be Ignored

2010 2020

16% Hispanic 14% 66% 4% A-A

20%

14%
Asian White

61% 5%

Source: Synovate 2010

Latino Growth from 2000 - 2010

In Texas, the Hispanic Population Will Eclipse the Anglo Population by 2015
45% 39%
40% 35% 30% 25%

45%

41% 42% 38%

45% Anglo Hispanic Black Other

20% 15% 10% 5%

12% 6%

11% 6%

11% 6%

0%

2010

2015

2020

Source: 2008 Texas State Data Centers Biennial Population Projections.

Fountain of Youth?
Latino population is the youngest of all ethnic groups Mean age by ethnicity:
Latino L ti African American Asian White 27.9 27 9 32.0 32.6 32 6 38.6

Starting their lives as adults g g p y Household needs changing rapidly

Source: U.S. Census

Foreign-Born Hispanic Adults are Majority

Foreign-Born

40% 60%
U.S. Born

Source: Synovate 2010

Country of Origin for U.S. Hispanics

3% 4%
11% 9%
Mexico Central America Puerto Rico

4% 9% 67%

South American Cuba Dominican Republic Others

Source: Synovate 2010

Country of Ancestry for Laredo Hispanics L d Hi i

Mexico

20%

Other

Note: All other nationalities accounted for less than 0.5%

80%

Source: Census 2000

Hispanic Shopping Habits

Hispanic Buying Power is Growing Across the Nation

Projected Growth of Hispanic Buying Power

+50% $1.5 Trillion

$ $1 Trillion

2010

2015

Source: Center for Economic Growth, The Multicultural Economy,2010

Latino Households Spend Nearly

Latinos Spend

$17 Billion
Annually on Household Furnishings and Equipment

$12 Billion
Each Year on Clothing

Hispanic Households Spend

$53 Billion
Latinos Spend for Food at Home Hispanic Consumers Spend

$6 Billion
Annually on Clothes for Their Kids

$ $7.5 Billion
Annually on Personal-Care Products

Source: Latino Consumers: Demographic Patterns and Spending Trends among Hispanic Americans, 8th Edition, Jan 11

Latinos Make Fewer Shopping Trips, But But

Shopping Trips per Household 149

143 142

Hispanic - Spanish Preferred

Hispanic - English Preferred

White Non-Hispanic

Source: Nielsen Homescan, Total U.S., 52 weeks ending 12/25/2011

Spend More Per Trip

Dollars Per Trip $52 $51

$47

Hispanic - Spanish Preferred

Hispanic - English Preferred

White Non-Hispanic

Source: Nielsen Homescan, Total U.S.; 52 weeks ending 12/25/2011

Hispanic Grocery Store Shopping Trips are y y More Likely To Be Socially Influenced
40% of Hispanics shop with their immediate family
vs. 18% of non-Hispanics

Hispanics more likely to consider recommendations from friends or family members when making food purchases (36%)
Compared to non-Hispanics (22%)

Source: Hispanic Path to Purchase, SmartRevenue & Univision, 07/31/12

Satisfying Others Important

Knowing that others will be satisfied is the third most important factor in deciding to make a food purchase for Hispanics, Hispanics behind taste and flavor
59% of Hispanics cite knowing others will lik it as a f t when th ill like factor h purchasing a food (vs. 36% of non-Hispanics)

Source: Hispanic Path to Purchase, SmartRevenue & Univision, 07/31/12

Hispanics Over-Index in Key Categories

Top 10 Hispanic Product Categories
Purchase Index: Share of Hispanic Dollars Divided by U.S. Household Dollar Share x 100

Rank 1 2 3 4 5 6 7 8 9 10

Category Dried Vegetables and Grains Hair Care Shortening Oil Baby Food Womens Fragrances Grooming Aids Disposable Diapers Family Planning Photographic Supplies Baby Needs

Hispanic Dollar Index 221 154 152 150 149 144 144 142 142 137

Source: Nielsen Homescan, 01/02/2011 - 12/31/2011

Latinos Make More Frequent Trips to the Mall

Hispanic Men Care More about Fashion

Latinos Like to Buy Clothes

Watches More Popular Among Latino Consumers

Source: Latino Consumers: Demographic Patterns and Spending Trends among Hispanic Americans, 8th Edition, Jan 11

Marketing to Hispanics Increases Revenue Growth

Study shows that for consumer packaged goods and their retailers, Hispanic allocation accounts to about 34% of CPG change in top line revenue growth The study analyzed the top 500 overall U.S. advertisers between 2006 and 2010,
Including approximately 39 Consumer Packaged Goods companies and retailers
including CocaCola, General Mills, Ralcorp, Groupe Danone, Nestl, Walmart, Walmart and Walgreens. Other companies analyzed include Clorox Walgreens Clorox, Unilever, KimberlyClark, Target, Church & Dwight, CVS, Hormel, PepsiCo, Kelloggs, Diageo, Pernod Ricard, Sara Lee, Fortune Brands, Rubbermaid, NutriSystem, ConAgra, Campbells, Hersheys, Loral and Este Lauder, among others

Source: Association of Hispanic Advertising Agencies, May 2012

Sales Tax Allocation Growing Steadily

1% City Sales Tax Allocations 26,935,220 15% Increase

23,471,293

FY Oct 09 Sep 10 09 10

FY Oct 10 Sep 11 10 11

Laredos (Mostly) Hispanic Residents Are Shopping More this Year Than Last Year! Sales Tax Revenue: FYTD Oct-Jul 12: $25 MM $2MM over budget

Increase in Sales Tax Allocation g Better Than Larger Cities

Sales Tax Allocation For City, Transit And Sports Venue For December 11 vs. YAG

13.1%

12.8% 10.3%

6.3%

Laredo

Houston

San Antonio

Dallas

Dont Buy Border Myths D t B B d M th

Dispelling Key Border Myths

Borders Are: High Crime Low Income High Unemployment

Myth: Borders are High Crime Areas

New data released by the FBI this week confirm that border cities remain among the safest places to live in the United States1 - U.S. Rep. Silvestre Reyes El Paso and other cities and towns along the border are consistently rated among the safest in the nation. - President Obama

1. Note: In reference to the FBI Uniform Crime Report released in May 2011

El Paso, Texas Violent crime rate: 458.3 per 100,000 Comparable to Gresham, Ore. -458.4 per 100,000 Murder rate: .8 per 100,000 Comparable to Sterling Heights, Mich. -- .8 per 100,000

Laredo, Texas Violent crime rate: 495.5 per 100,000 Comparable to Abilene, Texas -- 494 3 per 100 000 494.3 100,000 Murder rate: 3.9 per 100,000 Comparable to Portland, OR. - 3.9 per 100,000)

McAllen, Texas Violent crime rate: 222.1 per 100,000 100 000 Comparable to Garland, Texas -- 223.5 per 100,000 Murder rate: 3.7 per 100,000 Comparable to Elgin, Ill. -3.7 per 100,000

Brownsville, Texas , Violent crime rate: 312.7 per 100,000 Comparable to Fullerton, Calif. 319.2 per 100,000) Murder rate: 3 9 per 100 000 3.9 100,000 Comparable to Portland, OR 3.9 per 100,000)

--

--

Source: FBI Uniform Crime Report released in May 2011 as quoted by Governing.com on Terror on the Border? Not Exactly., May 27, 2011

Laredos Mean Income is Lower, But in Line g with Lower Cost of Living
Index

U.S. Mean HH Income: $68,259 $ , Laredo Mean HH Income: $51,380

100 90 80 70 60 50 40 30 20 10 0

84 75

U.S. National Average

Mean Income

Cost of Living

Sources: U.S. Census. 2010 American Community Survey 1-Year Estimates (Including Income and Benefits). Laredo, TX Cost of Living Index, Areavibes.com.

Laredo Unemployment is g Below National Average

Considerable gains since rate peaked in October 2009 at 9 3% 9.3%
Despite small increases in recent months
7.8% July 2012 y 8.3%

National
Source: Bureau of Labor Statistics, July 2012

Laredo

Being Near the Border is Good for Business!

Consumer Base Increases with Shoppers from Mexico

3.7 Million Non- Commercial NonVehicles 1.5 Million Commercial Vehicles 2.5 2 5 Million Pedestrians
(Laredos Crossings FYTD Oct-Jul 12) Oct-

$37 Million in Bridge Revenue

(Laredos Southbound Crossings FYTD OctOct-Jul 12)

Million Higher Than g Budgeted

(Laredos Southbound Crossings FYTD OctOct-Jul 12) 12)

Revenue Increases Also Started Since Last Fiscal Year

Laredo Southbound Bridge Revenues $43,638,202

An $818K Increase

$42,820,134

FY Oct 09 Sep 10 09 10

FY Oct 10 Sep 11 10 11

Key Semana Santa Shopping Holiday Shows Increased Traffic Into Laredo
Over the two-week period in FY 2012 that includes Holy Week, CBP issued 88,220 permits (March 28, 2012-April , ) 10, 2012) at the Laredo Port of Entry Compared to the same two-week period in FY 2011 (April 13 April 26 13-April 26, 2011) when CBP issued 67,927 permits This represents a 30%i ncrease in the number of I-94 tourist permits issued

Why Do Mexicans Come to the U.S. To Shop?

Better Prices On Name Brands

Bebe Jeans: $187.84 Bebe Jeans: $105.99

Guess Bag: $124.71

Guess Bag: $96.00

Better Prices On Name Brands

Guess Bag: $113.73 Guess Bag: $88.00

Michael Kors Shoe: $234 51 $234.51

Michael Kors Shoe: $184 95 $184.95

More Options
Michael Kors Items: 59 Michael Kors Items: 953

Access to Name Brand Discount Stores

Outlet Malls Off-Price, Close Out and Discount Retailers

They Even Know When To Shop!

Example: Mexican Black Friday Shopper Jorge Andrs Velasquez Gomez flew into Tijuana at night from Guadalajara, Mexico a three-hour f flight. He planned his trip to give him just enough time to cross the border and get in line for the midnight opening of stores at the Las Americas outlet mall. Th mall i j t north of th tl t ll The ll is just th f the border in San Ysidro. Velasquez Gomez was still shopping at 8:30 in the morning. Its tiring, its exhausting," said Velasquez Gomez, "but its really nice. Its cool.

Katie Euphrat

Source: Fronteras, Mexican Consumers Flock to the U.S. for Holiday Sales by Jill Replogle, Friday, November 25, 2011

Anecdotal Comment
Every time my family comes from Mexico y y y City, they come to shop. They even come pp g y with shopping lists from all of my extended family. Everybody saves all year just to p come and shop in the U.S. - A.L. Garcia, Account Executive

And Sh A d Shop They Do! Th D !

CYTD 12 They Have Declared

$110 MM in Purchases
Made in Laredo - Sales Tax Manifestos
Note: Only reflects state funds, does not include local funds that were reimbursed. Only
Source: State of Texas Economic Development and Tourism Office

And They Spend More In Laredo Than Other Cities

Manifesto Total Sales Amount CYTD 12 (Millions) 110.2
Note: Only reflects state funds, does not include local funds that were reimbursed

116.8

46.3 46 3 27.8

39.4

41.8 31.6 15.9 6.3

BROWNSVILLE

EL PASO

HIDALGO

HOUSTON

LAREDO

MCALLEN

MERCEDES

SAN ANTONIO

SAN MARCOS

Source: State of Texas Economic Development and Tourism Office

Laredo is Robust for Retail Real Estate

Great Local Consumers Visiting Mexicans with Money to Spend Improving Economy

My Book Can Help!

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For more information about Consumer trends and marketing, contact Kelly McDonald at 214-880-1717 or kelly@mcdonaldmarketing com kelly@mcdonaldmarketing.com

2012 McDonald Marketing 2700 Thomas Avenue Dallas, TX 75204 214-880-1717, Fax 214-880-7596 www.mcdonaldmarketing.com All rights reserved. No part of this material may be reproduced In any form without permission by the author.