UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ		Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2009

o		Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                      to                     

GENERAL GROWTH PROPERTIES, INC.

(Exact name of registrant as specified in its charter)

Delaware		42-1283895
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)

110 N. Wacker Dr., Chicago, IL 60606

(312) 960-5000

N / A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      þYes      o No

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate website, if any, every interactive data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes o No o.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      o Yes      þ No

The number of shares of Common Stock, $.01 par value, outstanding on May 5, 2009 was 313,765,799.

 

 

GENERAL GROWTH PROPERTIES, INC.
INDEX

		PAGE
		NUMBER
Part I FINANCIAL INFORMATION
Item 1: Consolidated Financial Statements (Unaudited)
Consolidated Balance Sheets as of March 31, 2009 and December 31, 2008			3
Consolidated Statements of Income and Comprehensive Income for the three months ended March 31, 2009 and 2008			4
Consolidated Statements of Equity for the three months ended March 31, 2009 and 2008			5
Consolidated Statements of Cash Flows for the three months ended March 31, 2009 and 2008			6
Notes to Consolidated Financial Statements			7
Note 1: Organization			7
Note 2: Acquisitions/Dispositions and Intangibles			17
Note 3: Unconsolidated Real Estate Affiliates			17
Note 4: Mortgages, Notes and Loans Payable			24
Note 5: Income Taxes			27
Note 6: Stock-Based Compensation Plans			28
Note 7: Other Assets and Liabilities			31
Note 8: Commitments and Contingencies			32
Note 9: Recently Issued Accounting Pronouncements			33
Note 10: Segments			34
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations			36
Liquidity and Capital Resources			43
Item 3: Quantitative and Qualitative Disclosures about Market Risk			45
Item 4: Controls and Procedures			45
Part II OTHER INFORMATION
Item 1: Legal Proceedings			45
Item 1A: Risk Factors			45
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds			48
Item 3: Defaults Upon Senior Securities			48
Item 4: Submission of Matters to a Vote of Security Holders			48
Item 5: Other Information			49
Item 6: Exhibits			49
SIGNATURE			50
EXHIBIT INDEX			51
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-99.1

GENERAL GROWTH PROPERTIES, INC.

		March 31,				December 31,
		2009				2008
		(Dollars in thousands)
Assets:
Investment in real estate:
Land		$	3,359,714			$	3,354,480
Buildings and equipment			23,361,227				23,609,132
Less accumulated depreciation			(4,388,406	)			(4,240,222	)
Developments in progress			1,004,869				1,076,675
Net property and equipment			23,337,404				23,800,065
Investment in and loans to/from Unconsolidated Real Estate Affiliates			1,864,353				1,869,929
Investment property and property held for development and sale			1,774,681				1,823,362
Net investment in real estate			26,976,438				27,493,356
Cash and cash equivalents			195,745				168,993
Accounts and notes receivable, net			385,982				385,334
Goodwill			230,901				340,291
Deferred expenses, net			325,333				333,901
Prepaid expenses and other assets			789,013				835,455
Total assets		$	28,903,412			$	29,557,330
Liabilities and Equity:
Mortgages, notes and loans payable		$	24,702,810			$	24,756,577
Investment in and loans to/from Unconsolidated Real Estate Affiliates			31,922				32,294
Deferred tax liabilities			867,866				868,978
Accounts payable and accrued expenses			1,347,854				1,539,149
Total liabilities			26,950,452				27,196,998
Redeemable noncontrolling interests:
Preferred			120,756				120,756
Common			41,049				379,169
Total redeemable noncontrolling interests			161,805				499,925
Commitments and Contingencies			—				—
Preferred Stock: $100 par value; 5,000,000 shares authorized; none issued and outstanding			—				—
Equity:
Common stock: $.01 par value; 875,000,000 shares authorized, 313,765,893 shares issued as of March 31, 2009 and 270,353,677 shares issued as of December 31, 2008			3,138				2,704
Additional paid-in capital			3,790,786				3,454,903
Retained earnings (accumulated deficit)			(1,884,668	)			(1,488,586	)
Accumulated other comprehensive loss			(65,243	)			(56,128	)
Less common stock in treasury, at cost, 1,449,939 shares as of March 31, 2009 and December 31, 2008			(76,752	)			(76,752	)
Total stockholders’ equity			1,767,261				1,836,141
Noncontrolling interests in consolidated real estate affiliates			23,894				24,266
Total equity			1,791,155				1,860,407
Total liabilities and equity		$	28,903,412			$	29,557,330

The accompanying notes are an integral part of these consolidated financial statements.

GENERAL GROWTH PROPERTIES, INC.

		Three Months Ended
		March 31,
		2009				2008
		(Dollars in thousands,
		except for per share amounts)
Revenues:
Minimum rents		$	499,107			$	524,942
Tenant recoveries			233,019				231,632
Overage rents			10,025				13,518
Land sales			8,986				9,066
Management and other fees			19,198				20,239
Other			18,305				30,925
Total revenues			788,640				830,322
Expenses:
Real estate taxes			71,558				68,649
Repairs and maintenance			55,356				62,100
Marketing			7,576				12,276
Other property operating costs			103,701				111,520
Land sales operations			10,614				9,921
Provision for doubtful accounts			10,332				2,709
Property management and other costs			43,408				52,138
General and administrative			45,825				8,098
Provisions for impairment			331,093				372
Depreciation and amortization			204,615				184,259
Total expenses			884,078				512,042
Operating (loss) income			(95,438	)			318,280
Interest income			730				557
Interest expense			(328,489	)			(325,692	)
Loss before income taxes, noncontrolling interests and equity in income of Unconsolidated Real Estate Affiliates			(423,197	)			(6,855	)
Benefit from (provision for) income taxes			11,514				(9,392	)
Equity in income of Unconsolidated Real Estate Affiliates			7,538				23,828
(Loss) income from continuing operations			(404,145	)			7,581
Discontinued operations — loss on dispositions			(55	)			—
Net (loss) income			(404,200	)			7,581
Allocation to noncontrolling interests			8,118				(4,221	)
Net (loss) income attributable to common stockholders		$	(396,082	)		$	3,360
Basic and Diluted (Loss) Earnings Per Share:
Continuing operations		$	(1.27	)		$	0.01
Discontinued operations			—				—
Total basic and diluted (loss) earnings per share		$	(1.27	)		$	0.01
Dividends declared per share			—				0.50
Comprehensive Income, Net:
Net (loss) income		$	(404,200	)		$	7,581
Other comprehensive income:
Net unrealized gains (losses) on financial instruments			2,109				(1,687	)
Accrued pension adjustment			101				(341	)
Foreign currency translation			(2,282	)			(2,020	)
Unrealized gains (losses) on available-for-sale securities			21				(128	)
Other comprehensive loss			(51	)			(4,176	)
Comprehensive loss allocated to noncontrolling interests			1				729
Adjustment for noncontrolling interests			(9,065	)			460
Comprehensive (loss) income, net attributable to common stockholders		$	(413,315	)		$	4,594

The accompanying notes are an integral part of these consolidated financial statements.

GENERAL GROWTH PROPERTIES, INC.

										Retained				Accumulated								Noncontrolling
						Additional				Earnings				Other								Interests in
		Common				Paid-In				(Accumulated				Comprehensive				Treasury				Consolidated Real				Total
		Stock				Capital				Deficit)				Income (Loss)				Stock				Estate Affiliates				Equity
		(Dollars in thousands)
Balance, December 31, 2007		$	2,457			$	2,601,296			$	(1,087,080	)		$	35,658			$	(95,635	)		$	—			$	1,456,696
Cumulative effect of change in accounting principles							(1,756,689	)			(14,312	)											7,457				(1,763,544	)
Adjusted balance January 1, 2008			2,457				844,607				(1,101,392	)			35,658				(95,635	)			7,457				(306,848	)
Net income											3,360												606				3,966
Cash distributions declared ($.50 per share)											(121,949	)															(121,949	)
Contributions to (distributions from) noncontrolling interests in Consolidated Real Estate Affiliates																							2,808				2,808
Conversion of operating partnership units to common stock (18,495 common shares)							706																				706
Issuance of common stock (20,327,210 common shares and 50 treasury shares)			203				731,350												3								731,556
Shares issued pursuant to CSA (356,661 treasury shares)							(914	)			(2,432	)							18,880								15,534
Restricted stock grant, net of compensation expense (351,232 common shares)			4				840																				844
Other comprehensive loss															(2,987	)											(2,987	)
Adjustment for noncontrolling interest in operating partnership							(102,565	)																			(102,565	)
Adjust noncontrolling interest in OP Units to fair value per SFAS 160							248,239																				248,239
Adjusted Balance, March 31, 2008		$	2,664			$	1,722,263			$	(1,222,413	)		$	32,671			$	(76,752	)		$	10,871			$	469,304
Balance, December 31, 2008 (as previously reported)		$	2,704			$	3,337,657			$	(1,452,733	)		$	(56,128	)		$	(76,752	)		$	—			$	1,754,748
Adjustments							117,246				(35,853	)											24,266				105,659
Adjusted balance, January 1, 2009			2,704				3,454,903				(1,488,586	)			(56,128	)			(76,752	)			24,266				1,860,407
Net loss											(396,082	)											659				(395,423	)
Contributions to (distributions from) noncontrolling interests in Consolidated Real Estate Affiliates																							(1,031	)			(1,031	)
Conversion of operating partnership units to common stock (43,408,053 common shares)			434				324,054																				324,488
Issuance of common stock (69 common shares)			1				42																				43
Restricted stock grant forfeitures, net of compensation expense (65 common shares forfeited)			(1	)			204																				203
Other comprehensive loss															(9,115	)											(9,115	)
Adjustment for noncontrolling interest in operating partnership							11,583																				11,583
Balance, March 31, 2009		$	3,138			$	3,790,786			$	(1,884,668	)		$	(65,243	)		$	(76,752	)		$	23,894			$	1,791,155

The accompanying notes are an integral part of these consolidated financial statements.

GENERAL GROWTH PROPERTIES, INC.

		Three Months Ended
		March 31,
		2009				2008
		(In thousands)
Cash Flows from Operating Activities:
Net (loss) income		$	(404,200	)		$	7,581
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Equity in income of Unconsolidated Real Estate Affiliates			(7,538	)			(23,828	)
Provision for doubtful accounts			10,332				2,709
Distributions received from Unconsolidated Real Estate Affiliates			10,711				9,777
Depreciation			190,622				172,302
Amortization			13,993				11,957
Amortization of deferred finance costs and debt market rate adjustments			18,069				4,566
Non-cash interest expense on Exchangeable Senior Notes			6,692				6,298
Non-cash interest expense resulting from termination of interest rate swaps			(8,614	)			—
Provisions for impairment			331,093				372
Participation expense pursuant to Contingent Stock Agreement			(177	)			91
Land/residential development and acquisitions expenditures			(17,251	)			(53,613	)
Cost of land sales			2,716				1,082
Straight-line rent amortization			(8,636	)			(11,942	)
Amortization of intangibles other than in-place leases			1,479				(3,462	)
Glendale Matter deposit			67,054				—
Net changes:
Accounts and notes receivable			(2,345	)			20,659
Prepaid expenses and other assets			(8,592	)			(10,329	)
Deferred expenses			(11,865	)			(14,634	)
Accounts payable and accrued expenses and deferred tax liabilities			(11,846	)			29,418
Other, net			(12,160	)			(10,038	)
Net cash provided by operating activities			159,537				138,966
Cash Flows from Investing Activities:
Acquisition/development of real estate and property additions/improvements			(79,596	)			(553,029	)
Proceeds from sales of investment properties			6,393				17,166
Increase in investments in Unconsolidated Real Estate Affiliates			(21,209	)			(33,947	)
Distributions received from Unconsolidated Real Estate Affiliates in excess of income			24,799				11,089
Loans from (to) Unconsolidated Real Estate Affiliates, net			(6,621	)			64,385
Decrease in restricted cash			3,147				9,723
Other, net			(752	)			2,226
Net cash used in investing activities			(73,839	)			(482,387	)
Cash Flows from Financing Activities:
Proceeds from issuance of mortgages, notes and loans payable			—				1,010,000
Principal payments on mortgages, notes and loans payable			(57,996	)			(1,176,336	)
Deferred financing costs			(741	)			(6,798	)
Cash distributions paid to common stockholders			—				(121,950	)
Cash distributions paid to holders of Common Units			(112	)			(26,016	)
Cash distributions paid to holders of perpetual and convertible preferred units			—				(2,903	)
Proceeds from issuance of common stock, including from common stock plans			43				821,630
Other, net			(140	)			2,722
Net cash (used in) provided by financing activities			(58,946	)			500,349
Net change in cash and cash equivalents			26,752				156,928
Cash and cash equivalents at beginning of period			168,993				99,534
Cash and cash equivalents at end of period		$	195,745			$	256,462
Supplemental Disclosure of Cash Flow Information:
Interest paid		$	263,934			$	307,762
Interest capitalized			15,497				16,320
Income taxes paid			6,485				21,594
Non-Cash Transactions:
Common stock issued in exchange for Operating Partnership Units		$	324,488			$	706
Common stock issued pursuant to Contingent Stock Agreement			—				15,534
Change in accrued capital expenditures included in accounts payable and accrued expenses			(42,778	)			46,221
Change in accrued purchase price of The Shoppes at The Palazzo			(120,216	)			200,288

The accompanying notes are an integral part of these consolidated financial statements.

Notes to Consolidated Financial Statements

NOTE 1 ORGANIZATION

Readers of this Quarterly Report should refer to the Company’s (as defined below) audited Consolidated Financial Statements for the year ended December 31, 2008 which are included in the Company’s Annual Report on Form 10-K (the “Annual Report”) for the fiscal year ended December 31, 2008 (Commission File No. 1-11656), as certain footnote disclosures which would substantially duplicate those contained in our Annual Report have been omitted from this report. Capitalized terms used, but not defined, in this Quarterly Report have the same meanings as in our Annual Report.

General

General Growth Properties, Inc. (“GGP”), a Delaware corporation, is a self-administered and self-managed real estate investment trust, referred to as a “REIT” which, as described in “Liquidity” below, filed for bankruptcy protection under Chapter 11 of Title 11 of the United States Code (“Chapter 11”) in the Southern District of New York (the “Bankruptcy Court”) on April 16, 2009. GGP was organized in 1986 and through its subsidiaries and affiliates owns, operates, manages and develops retail and other rental properties, primarily shopping centers, which are located primarily throughout the United States. GGP also holds assets through its international Unconsolidated Real Estate Affiliates in Brazil, Turkey and Costa Rica in which GGP has a net investment of $159.5 million at March 31, 2009 and $166.7 million at December 31, 2008. Additionally, GGP develops and sells land for residential, commercial and other uses primarily in large-scale, long-term master planned community projects in and around Columbia, Maryland; Summerlin, Nevada; and Houston, Texas, as well as one residential condominium project located in Natick (Boston), Massachusetts. Substantially all of our business is conducted by our operating partnership, GGP Limited Partnership (“GGPLP” or the “Operating Partnership”), in which, at March 31, 2009, GGP holds approximately a 98% ownership interest. In these notes, the terms “we,” “us” and “our” refer to GGP and its subsidiaries (the “Company”).

In this report, we refer to our ownership interests in majority-owned or controlled properties as “Consolidated Properties,” to joint ventures in which we own a noncontrolling interest as “Unconsolidated Real Estate Affiliates” and the properties owned by such joint ventures as the “Unconsolidated Properties.” Our “Company Portfolio” includes both our Consolidated Properties and our Unconsolidated Properties.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of GGP, our subsidiaries and joint ventures in which we have a controlling interest. For consolidated joint ventures, the noncontrolling partner’s share of operations (generally computed as the joint venture partner’s ownership percentage) is included in Noncontrolling Interests in Consolidated Real Estate Affiliates as permanent equity of the Company. All significant intercompany balances and transactions have been eliminated.

In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods have been included. The results for the interim periods ended March 31, 2009 are not necessarily indicative of the results to be obtained for the full fiscal year.

Liquidity

As of March 31, 2009, we had $195.7 million of cash on hand, we had $2.01 billion in past due debt, and an additional $4.09 billion of debt that could be accelerated by our lenders. As we were unable to reach an out-of-court consensus with our lenders concerning such past due and potentially accelerated debt, on April 16, 2009 (the “Petition Date”), the Company, the Operating Partnership and certain of the Company’s domestic subsidiaries filed voluntary petitions for relief under Chapter 11 in the Bankruptcy Court. On April 22, 2009, certain additional domestic subsidiaries (collectively with the subsidiaries filing on April 16, 2009, the Company and the Operating Partnership, the “Debtors”) of the Company also filed voluntary petitions for relief in the Bankruptcy Court (collectively, the “Chapter 11 Cases”) which the Bankruptcy Court has ruled may be jointly administered. However, neither GGMI, certain of our wholly-owned subsidiaries, nor any of our joint ventures, either consolidated or unconsolidated, have sought such protection.

Collectively, the Debtors own and operate approximately 166 regional shopping centers and the Debtors intend to work with their constituencies to emerge from bankruptcy as quickly as possible while executing on a plan of reorganization that extends mortgage maturities, reduces corporate debt and overall leverage and that preserves

GENERAL GROWTH PROPERTIES, INC.

GGP’s integrated, national business operations. Pursuant to Chapter 11, a debtor is afforded certain protection against its creditors and creditors are prohibited from taking certain actions (such as pursuing collection efforts or proceeding to foreclose on secured obligations) related to debts that were owed prior to the commencement of the Chapter 11 Cases.

The Debtors are currently operating as “debtors in possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the orders of the Bankruptcy Court. On April 17, 2009, the Bankruptcy Court granted a variety of “first day” motions that will allow the Company, on an interim basis, to continue to operate its business in the ordinary course without interruption, and covering, among other things, employee obligations, critical service providers, tax matters, insurance matters, tenant obligations, cash management and cash collateral. The Debtors have retained, subject to Bankruptcy Court approval, legal and financial professionals to advise the Debtors on the bankruptcy proceedings and certain other “ordinary course” professionals. From time to time, the Debtors may seek Bankruptcy Court approval for the retention of additional professionals. A hearing on a number of these matters will take place on May 8, 2009.

The following is a list of loans with past due maturity dates, as of May 7, 2009, where collection and foreclosure proceedings have been stayed by the Chapter 11 petitions:

		Original or Extended				Amount Due
Loan/Property		Maturity Date				As of March 31, 2009*
						(In thousands)
Short-term Secured Loan			2/01/09			$	220,500
Oakwood Center			2/09/09				94,821
Chico Mall			2/11/09				57,203
Fashion Show			2/12/09				648,219
The Shoppes at The Palazzo			2/12/09				249,623
Deerbrook			3/02/09				73,964
Jordan Creek			3/02/09				185,950
Southland			3/02/09				81,477
TRCLP Unsecured Bonds			3/16/09				395,000
Prince Kuhio			4/01/09				37,826
JP Realty Secured Notes			4/09/09				33,196
Town East			4/13/09				105,391
TRCLP Unsecured Bonds			4/30/09				200,000
The Grand Canal Shoppes			5/01/09				394,366
						$	2,777,536

*		Includes principal payments through March 31, 2009.

In addition to the debt defaults discussed above, the commencement of the Chapter 11 Cases triggered defaults on substantially all debt obligations of the Debtors. However, under section 362 of Chapter 11, the filing of a bankruptcy petition automatically stays most actions against the debtor’s estate. Absent an order of the Court, these prepetition liabilities are subject to settlement under a plan of reorganization.

With respect to certain of these loans, short-term extension or forebearance agreements were obtained, all of which have expired. For example, the aggregate of $900 million mortgage loans secured by our Fashion Show and The Shoppes at The Palazzo shopping centers (the “Fashion Show/Palazzo Loans”) matured on November 28, 2008. As we were unable to extend, repay or refinance these loans, on December 16, 2008, we entered into forbearance and waiver agreements with respect to the Fashion Show/Palazzo loan agreements, which expired on February 12, 2009. As a result of the non-payment of the Fashion Show/Palazzo Loans, the maturity date of each of the 2006 Credit Facility ($2.58 billion) and the Secured Portfolio Facility ($1.51 billion) could be accelerated by our lenders. Accordingly, we entered into forbearance agreements in December 2008 relating to each of the 2006 Credit Facility and Secured Portfolio Facility. Each of these forbearance agreements expired on March 15, 2009.

Certain groups of unsecured bonds issued by TRCLP matured on March 16, 2009 ($395.0 million), and April 30, 2009 ($200.0 million). Failure to pay these bonds at maturity constituted a default under these and other unsecured bonds issued by TRCLP having an aggregate outstanding balance of $2.25 billion as of March 31, 2009. In March 2009, we undertook a consent solicitation of the bondholders for the entire $2.25 billion of TRCLP bonds, seeking their consent to forebear from exercising their remedies with respect to certain payment

GENERAL GROWTH PROPERTIES, INC.

and other defaults under the bonds through December 31, 2009. Although a significant number of consents were obtained, the desired thresholds were not obtained and the legal entities obligated by such bonds were included in our Chapter 11 Cases.

In addition to our mortgage and other debt, current liabilities and liens, we are subject to certain executory contracts. The Debtors, subject to the approval of the Bankruptcy Court, may assume or reject these contracts. Although we are considering the rejection of certain of such contracts, (except for our operating property tenant leases), none have been rejected as of this time. Claims may result if an executory contract is rejected, however, no such potential claims have been recorded or reflected at this time.

As described above, we have received legal protection from our creditors pursuant to the Chapter 11 Cases. This protection is limited in duration and we will be proceeding to negotiate a reorganization plan, subject to the approval of the Bankruptcy Court, with our lenders, other creditors, and other stakeholders. There can be no assurance that such negotiations will yield sufficient reductions or deferrals of our current and future debt maturities to allow us to continue operations. Professional service costs with respect to the Chapter 11 Cases and our examination of financial and strategic alternatives have been expensed and are included as general and administrative expense in our consolidated financial statements. In periods subsequent to our bankruptcy filing, such costs will be separately reported as restructuring costs.

Our potential inability to address our past due and future debt maturities raises substantial doubts as to our ability to continue as a going concern. The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Accordingly, our consolidated financial statements do not reflect any adjustments related to the recoverability of assets and satisfaction of liabilities that might be necessary should we be unable to continue as a going concern.

Reclassifications and Adoption of New Accounting Pronouncements

Certain amounts in the 2008 Consolidated Financial Statements have been reclassified to conform to the current period presentation. In addition, as of January 1, 2009 we adopted the following two accounting pronouncements that required retrospective application, in which all periods presented reflect the necessary changes.

As of January 1, 2009, we adopted FASB Staff Position No. APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (including Partial Cash Settlement)” (“FSP 14-1”) which required us to separately account for the liability and equity components of our Exchangeable Senior Notes (Note 4) in a manner that reflects the nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. The impact of the required retrospective application of FSP 14-1 on our consolidated financial statements is that the Exchangeable Senior Notes have been reflected as originally being issued at a discount, with such discount being reflected in subsequent periods as a non-cash increase in interest expense. Below is a summary of the effects of the retrospective application of FSP 14-1 on the consolidated financial statements and the Exchangeable Senior Notes, see Note 4 for more disclosures regarding the maturity date and conversion price for the Exchangeable Senior Notes.

		As Previously Reported				Impact of				Current Presentation
		December 31, 2008				FSP 14-1				December 31, 2008
Balance Sheet		(In thousands)
Mortgages, notes and loans payable		$	24,853,313			$	(96,736	)		$	24,756,577
		As Previously Reported				Impact of				Current Presentation
		March 31, 2008				FSP 14-1				March 31, 2008
Income Statement		(In thousands)
Interest expense		$	319,394			$	6,298			$	325,692
Allocation to noncontrolling interests			5,321				(1,100	)			4,221
Net income attributable to common stockholders			8,558				(5,198	)			3,360
Basic and Diluted Earnings Per Share		$	0.03			$	(0.02	)		$	0.01

GENERAL GROWTH PROPERTIES, INC.

		March 31, 2009				December 31, 2008
		(In thousands)
Balance Sheet:
Principal amount of liability		$	1,550,000			$	1,550,000
Unamortized discount			(90,044	)			(96,736	)
Carrying amount of liability component		$	1,459,956			$	1,453,264
Carrying amount of equity component		$	139,882			$	139,882

		For the Three Months				For the Three Months
		Ended March 31, 2009				Ended March 31, 2008
		(In thousands)
Income Statement:
Coupon interest		$	15,423			$	15,423
Discount amortization — FSP14-1 implementation			6,692				6,298
Total interest		$	22,115			$	21,721
Effective interest rate			5.71	%			5.61	%

As of January 1, 2009, we adopted SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements” (“SFAS 160”) which changed the reporting for minority interests in our consolidated joint ventures by re-characterizing them as noncontrolling interests and re-classifying such minority interests as a component of permanent equity in our Consolidated Balance Sheets. The minority interests related to our common and preferred operating partnership units have been re-characterized as redeemable noncontrolling interests and will remain as temporary equity at a mezzanine level per EITF Topic No. D-98, “Classification and Measurement of Redeemable Securities” (“Topic D-98”), in our Consolidated Balance Sheets presented at the greater of the carrying amount adjusted for the noncontrolling interest’s share of the allocation of income or loss (and its share of other comprehensive income or loss) and dividends or the fair value as of each measurement date subsequent to the measurement date. Changes in fair value from period to period are charged to Additional paid-in capital on our Consolidated Balance Sheets. SFAS 160 also changed the presentation of the income allocated to minority interests by re-characterizing it as allocations to noncontrolling interests and re-classifying such income as an adjustment to net income to arrive at net income attributable to common stockholders.

Noncontrolling Interests

The holders of the Common Units share equally with our common stockholders on a per share basis in any distributions by the Operating Partnership on the basis that one Common Unit is equivalent to one share of GGP common stock. Under certain circumstances, the Common Units (other than Common Units held by the parties to the Rights Agreement dated July 27, 1993, as described below) can be redeemed at the option of the holders for cash or, at our election, shares of GGP common stock on a one-for-one basis. Upon receipt of a request for redemption by a holder of such Common Units, the Company, as general partner of the Operating Partnership, has the option to pay the redemption price for such Common Units with shares of common stock of the Company (subject to certain conditions), or in cash, on a one-for-one basis with a cash redemption price equivalent to the market price of one share of common stock of the Company at the time of redemption. Parties to the Rights Agreement dated July 27, 1993 have the right to redeem the Common Units covered by such agreement for shares of GGP Common Stock on a one-for-one basis until they and certain affiliates own 25% of the outstanding shares of GGP Common Stock, at which point such parties have the right to require the Company to purchase any additional Common Units subject to the agreement for shares of GGP Common Stock or cash, at the Company’s election and subject to certain limitations. All prior requests for redemption of Common Units have been fulfilled with shares of the Company’s common stock. Notwithstanding this historical practice, the aggregate amount of cash that would have been paid to the holders of the outstanding Common Units as of March 31, 2009 if such holders had requested redemption of the Common Units as of March 31, 2009, and all such Common Units were redeemed (or purchased in the case of the Rights Agreement) for cash, would have been $5.2 million. We may not have the liquidity or requisite Bankruptcy Court approvals necessary to redeem Common Units for cash. As of March 31, 2009, the redeemable noncontrolling interests

GENERAL GROWTH PROPERTIES, INC.

are presented in our Consolidated Balance Sheets at carrying value because the carrying value of the units was greater than the conversion value of the units based on the stock price at March 31, 2009. The following table reflects the activity of the redeemable noncontrolling interests for the three months ended March 31, 2009 and 2008.

		(In thousands)
Balance at December 31, 2007 (as adjusted)		$	2,358,901
Net income			3,615
Distributions			(28,808	)
Conversion of operating partnership units into common shares			(706	)
Other comprehensive loss			(1,189	)
Adjustment for noncontrolling interests in operating partnership			102,565
Adjust redeemable noncontrolling interests to fair value per SFAS 160			(248,239	)
Balance at March 31, 2008		$	2,186,139
Balance at December 31, 2008 (as adjusted)		$	499,925
Net loss			(8,777	)
Distributions			(2,336	)
Conversion of operating partnership units into common shares			(324,488	)
Other comprehensive income			9,064
Adjustment for noncontrolling interests in operating partnership			(11,583	)
Balance at March 31, 2009		$	161,805

On January 2, 2009, MB Capital Units LLC, pursuant to the Rights Agreement, converted 42,350,000 Common Units (approximately 13% of all outstanding Common Units, including those owned by GGP) held in the Company’s Operating Partnership into 42,350,000 shares of GGP common stock.

The Operating Partnership has also issued Convertible Preferred Units, which are convertible, with certain restrictions, at any time by the holder into Common Units of the Operating Partnership at the following rates (subject to adjustment):

		Number of
		Common Units
		for each
		Preferred Unit
Series B			3.000
Series D			1.508
Series E			1.298

Impairment

Operating properties and properties under development

Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-lived Assets,” (“SFAS 144”) requires that if impairment indicators exist and the undiscounted cash flows expected to be generated by an asset are less than its carrying amount, an impairment charge should be recorded to write down the carrying amount of such asset to its fair value. We review our real estate assets, including investment land, land held for development and sale and developments in progress, for potential impairment indicators whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The cash flow estimates used both for estimating fair value and the recoverability analysis are inherently judgmental and reflect current and projected trends in rental, occupancy and capitalization rates, and our estimated holding periods for the applicable assets. Impairment indicators for our retail and other segment are assessed separately for each property and include, but are not limited to, significant decreases in real estate property net operating income and occupancy percentages. Impairment indicators for our Master Planned Communities segment are assessed separately for each community and include, but are not limited to, significant decreases in sales pace or average selling prices, significant increases in expected land development

GENERAL GROWTH PROPERTIES, INC.

and construction costs or cancellation rates, and projected losses on expected future sales. Impairment indicators for pre-development costs, which are typically costs incurred during the beginning stages of a potential development, and developments in progress are assessed by project and include, but are not limited to, significant changes in projected completion dates, revenues or cash flows, development costs, market factors and sustainability of development projects. If an indicator of potential impairment exists, the asset is tested for recoverability by comparing its carrying value to the estimated future undiscounted cash flow. Although the estimated value of certain assets may be exceeded by the carrying amount, a real estate asset is only considered to be impaired when its carrying value cannot be recovered through estimated future undiscounted cash flows. To the extent an impairment provision is necessary, the excess of the carrying value of the asset over its estimated fair value is expensed.

We recorded impairment charges of $81.1 million for the three months ended March 31, 2009 related to our River Falls Mall located in Clarksville, Indiana, which was calculated using a discounted cash flow analysis (at a 10.75% discount rate) incorporating available market information and other management assumptions including estimates of future cash flows based on a number of factors such as historical operating results, known trends and market and economic conditions. We recorded impairment charges of $40.3 million for the three months ended March 31, 2009 related to our Owings Mills Mall located in Owings Mills, Maryland, which was calculated using a discounted cash flow analysis (at a 9.25% discount rate) incorporating available market information and other management assumptions including estimates of future cash flows based on a number of factors such as historical operating results, known trends and market/economic conditions.

The continuing deterioration of the economy in general and our financial condition specifically has led to further tests for impairment indicators of prospective redevelopment and development projects. Accordingly, we recorded impairment charges of $16.6 million for the three months ended March 31, 2009 and $0.4 million for the three months ended March 31, 2008 related to the write down of various pre-development costs that were determined to be non-recoverable due to the related projects being terminated. In addition, for the three months ended March 31, 2009, we recognized impairment charges of $24.2 million for our development project in Allen, Texas, which was calculated using a projected sales price analysis related to an existing pending sales contract, and $6.7 million related to our development project in Redlands, California, which was calculated using a projected sales price analysis, incorporating available market information including comparable sales.

We recorded an impairment charge of $52.8 million for the three months ended March 31, 2009 related to our Fairwood master planned community, which was calculated using a projected sales price analysis related to an existing pending sales contract for a large bulk sale of lots anticipated to close in the third quarter of 2009.

All of these impairment charges are included in provisions for impairment in our consolidated financial statements.

No other impairments of our investment in real estate were recorded for the three months ended March 31, 2009 and 2008.

Investment in Unconsolidated Real Estate Affiliates

Per Accounting Principles Board (“APB”) Opinion No. 18, “The Equity Method of Accounting for Investments in Common Stock,” a series of operating losses of an investee or other factors may indicate that a decrease in value of our investment in the Unconsolidated Real Estate Affiliates has occurred which is other-than-temporary. The investment in each of the Unconsolidated Real Estate Affiliates is evaluated for recoverability and valuation declines that are other than temporary periodically and as deemed necessary. Accordingly, in addition to the property-specific impairment analysis that we perform on the investment properties owned by such joint ventures (as part of our investment property impairment process described above), we also considered the ownership and distribution preferences and limitations and rights to sell and repurchase of our ownership interests. Based on such evaluations, no provisions for impairment of our investments in Unconsolidated Real Estate Affiliates were recorded for the three months ended March 31, 2009 and 2008.

Goodwill

The excess of the cost of an acquired entity over the net of the amounts assigned to assets acquired (including identified intangible assets) and liabilities assumed is recorded as goodwill. Goodwill has been recognized and allocated to specific properties in our Retail and Other Segment since each individual rental property or each operating property is an operating segment and considered a reporting unit. Statement of Financial Accounting

GENERAL GROWTH PROPERTIES, INC.

Standards No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”), states that goodwill should be tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. As of March 31, 2009, we performed an interim impairment test of goodwill as changes in current market and economic conditions during the first quarter of 2009 indicated an impairment of the asset might have occurred. We perform this test by first comparing the estimated fair value of each property with our book value of the property, including, if applicable, its allocated portion of aggregate goodwill. We assess fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends, and market/economic conditions. If the book value of a property, including its goodwill, exceeds its estimated fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any. In this second step, if the implied fair value of goodwill is less than the book value of goodwill, an impairment charge is recorded. Based on our testing methodology, we recorded provisions for impairment related to the allocated goodwill of $109.4 million for the three months ended March 31, 2009. This impairment was primarily driven by the increases in capitalization rate assumptions in the first quarter 2009 and reduced estimates of NOI, primarily due to the continued downturn in the real estate market. No impairments of goodwill were recorded for the three months ended March 31, 2008.

General

We can provide no assurance that material impairment charges with respect to operating properties, Unconsolidated Real Estate Affiliates, construction in progress, property held for development and sale or goodwill will not occur in future periods. Our tests for impairment at March 31, 2009 were based on the most current information available to us. If the conditions mentioned above deteriorate, or if our plans regarding our assets change, particularly due to our Chapter 11 Cases, subsequent tests for impairment could result in additional impairment charges in the future. Furthermore, certain of our properties had fair values less than their carrying amounts. However, based on the Company’s plans with respect to those properties, we believe that the carrying amounts are recoverable and therefore, under applicable GAAP guidance, no additional impairments were taken. Accordingly, we will continue to monitor circumstances and events in future periods to determine whether additional impairments are warranted.

Fair Value Measurements

We adopted SFAS No. 157, “Fair Value Measurements” (“SFAS 157”) as of January 1, 2008 for our financial assets and liabilities and such adoption did not change our valuation methods for such assets and liabilities. This adoption applies primarily to our derivative financial instruments, which are assets and liabilities carried at fair value (primarily based on unobservable market data) on a recurring basis in our consolidated financial statements. We have investments in marketable securities that are immaterial to our consolidated financial statements. In addition, we adopted SFAS 157 as of January 1, 2009 for our non-financial assets and liabilities, which only impacted the assets measured at fair value due to impairments incurred since adoption.

The following table summarizes our liabilities that are measured at fair value on a recurring basis:

						Quoted Prices in				Significant
		Total Fair Value				Active Markets				Other				Significant
		Measurement				for Identical				Observable				Unobservable
		March 31, 2009				Assets (Level 1)				Inputs (Level 2)				Inputs (Level 3)
		(In thousands)
Liabilities:
Interest Rate Swaps (1)		$	14,580,834			$	—			$	—			$	14,580,834
Interest Rate Caps (1)			2,406,039				—				—				2,406,039
		$	16,986,873			$	—			$	—			$	16,986,873

GENERAL GROWTH PROPERTIES, INC.

		Using Significant Unobservable Inputs (Level 3)
		Interest Rate Swaps				Interest Rate Caps				Total
		(In thousands)
Balance at January 1, 2009		$	27,714,675			$	2,507,693			$	30,222,368
Included in other comprehensive (loss) income			—				(101,654	)			(101,654	)
Included in earnings (1)			(13,133,841	)			—				(13,133,841	)
Balance at March 31, 2009		$	14,580,834			$	2,406,039			$	16,986,873

The following table summarizes our assets that are measured at fair value on a nonrecurring basis:

						Quoted Prices in				Significant
		Total Fair Value				Active Markets				Other				Significant
		Measurement				for Identical				Observable				Unobservable				Total Gains
		March 31, 2009				Assets (Level 1)				Inputs (Level 2)				Inputs (Level 3)				(Losses)
		(In thousands)
Investments in real estate: (1)
Allen, TX development		$	29,511			$	—			$	29,511			$	—			$	(24,166	)
Fairwood MPC			12,629				—				12,629				—				(52,769	)
Owings Mills Mall			38,068				—				—				38,068				(40,308	)
Redlands, CA development			6,727				—				—				6,727				(6,747	)
River Falls Mall			22,003				—				—				22,003				(81,114	)
		$	108,938			$	—			$	42,140			$	66,798			$	(205,104	)

Derivative Financial Instruments

As of January 1, 2009, we adopted SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“SFAS 161”) which requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments.

We use derivative financial instruments to reduce risk associated with movement in interest rates. We may choose or be required by lenders to reduce cash flow and earnings volatility associated with interest rate risk exposure on variable-rate borrowings and/or forecasted fixed-rate borrowings by entering into interest rate swaps or interest rate caps. We do not use derivative financial instruments for speculative purposes.

As of March 31, 2009, our interest rate swaps no longer qualify as highly effective and therefore no longer qualify for hedge accounting treatment as the Company made the decision not to pay future settlement payments under such swaps. As a result, all changes in fair value (accruals, net settlements, changes in value) for these non-designated/mark-to-market hedges are included in interest expense in our consolidated financial statements, which for the three months ended March 31, 2009 was a reduction in interest expense of $13.1 million. As the interest payments on the hedged debt remain probable, the net balance in the gain or loss in accumulated other comprehensive (loss) income of $(27.7) million that existed as of December 31, 2008 remains in accumulated other comprehensive (loss) income and is amortized to interest expense as the hedged forecasted transactions impact earnings or are deemed probable not to occur. The amortization of the accumulated other comprehensive (loss) income for the three months ended March 31, 2009 was $4.5 million of additional interest expense.

Under interest rate cap agreements, we make initial premium payments to the counterparties in exchange for the right to receive payments from them if interest rates exceed specified levels during the agreement period. Notional principal amounts are used to express the volume of these transactions, but the cash requirements and amounts subject to credit risk are substantially less. As of March 31, 2009, we had three outstanding interest rate cap derivatives that were designated as cash flow hedges of interest rate risk with a notional value $1.13 billion.

Parties to interest rate exchange agreements are subject to market risk for changes in interest rates and risk of credit loss in the event of nonperformance by the counterparty. We do not require any collateral under these agreements, but deal only with well known financial institution counterparties (which, in certain cases, are also the lenders on the related debt) and expect that all counterparties will meet their obligations.

GENERAL GROWTH PROPERTIES, INC.

The interest rate cap derivative financial instruments are carried at fair value while changes in the fair value of the receivable or payable under interest rate cap agreements are accounted for as adjustments to interest expense on the related debt. We have not recognized any losses as a result of hedge discontinuance and the expense that we recognized related to changes in the time value of interest rate cap agreements were insignificant for 2009 and 2008.

Revenue Recognition and Related Matters

Minimum rent revenues are recognized on a straight-line basis over the terms of the related leases. Minimum rent revenues also include amounts collected from tenants to allow the termination of their leases prior to their scheduled termination dates and accretion related to above and below-market tenant leases on acquired properties. Termination income recognized was $7.4 million for the three months ended March 31, 2009 and $18.4 million for the three months ended March 31, 2008. Net accretion related to above and below-market tenant leases was $0.9 million for the three months ended March 31, 2009 and $5.9 for the three months ended March 31, 2008.

Straight-line rent receivables, which represent the current net cumulative rents recognized prior to when billed and collectible as provided by the terms of the leases, of $236.8 million as of March 31, 2009 and $228.1 million as of December 31, 2008, are included in Accounts and notes receivable, net in our consolidated financial statements.

Percentage rent in lieu of fixed minimum rent received from tenants was $11.4 million for the three months ended March 31, 2009 and $11.3 million for the three months ended March 31, 2008, and is included in Minimum rents in our consolidated financial statements.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. For example, significant estimates and assumptions have been made with respect to useful lives of assets, capitalization of development and leasing costs, provision for income taxes, recoverable amounts of receivables and deferred taxes, initial valuations and related amortization periods of deferred costs and intangibles, particularly with respect to acquisitions, impairment of long-lived assets and goodwill, and cost ratios and completion percentages used for land sales. Actual results could differ from these and other estimates.

The Glendale Matter

On December 19, 2008, the defendants (GGP and GGP/Homart II, LLC) agreed to terms of a settlement and mutual release agreement with respect to the Glendale Matter which released the defendants from all past, present and future claims in exchange for a settlement payment of $48.0 million, which was paid from the appellate bond cash collateral account in January 2009. Concurrently, GGP agreed with its joint venture partner in GGP/Homart II, LLC, New York State Common Retirement Fund (“NYSCRF”), that GGP would not be reimbursed for any portion of this payment, and we would reimburse $5.5 million of costs to NYSCRF in connection with the settlement. Accordingly, as of December 2008, the Company adjusted its liability for the Judgment Amount from $89.4 million to $48.0 million and reversed legal fees incurred by GGP/Homart II of $14.2 million that were previously recorded at 100% by GGP and post-judgment related interest expense of $7.0 million. The net impact of these items related to the settlement was a credit of $57.1 million reflected in litigation recovery in our Consolidated Statements of Income and Comprehensive Income for the year ended December 31, 2008. Also as a result of the settlement, the Company reflected its 50% share of legal costs that had previously been recorded at 100% as $7.1 million of additional expense reflected in Equity in income of Unconsolidated Real Estate Affiliates in our Consolidated Statements of Income and Comprehensive Income for the year ended December 31, 2008.

GENERAL GROWTH PROPERTIES, INC.

Earnings Per Share (“EPS”)

Information related to our EPS calculations is summarized as follows:

		Three Months Ended March 31,
		2009								2008
		Basic				Diluted				Basic				Diluted
						(In thousands)
Numerators:
(Loss) income from continuing operations		$	(404,145	)			(404,145	)		$	7,581			$	7,581
Discontinued operations — loss on dispositions			(55	)			(55	)			—				—
Net (loss) income			(404,200	)			(404,200	)			7,581				7,581
Allocation to noncontrolling interests			8,118				8,118				(4,221	)			(4,221	)
Net (loss) income attributable to common stockholders		$	(396,082	)		$	(396,082	)		$	3,360			$	3,360
Denominators:
Weighted average number of common shares outstanding — basic			310,868				310,868				244,765				244,765
Effect of dilutive securities — stock options			—				—				—				153
Weighted average number of common shares outstanding — diluted			310,868				310,868				244,765				244,918

Diluted EPS excludes options where the exercise price was higher than the average market price of our common stock, and therefore would have an anti-dilutive effect, and options for which vesting requirements were not satisfied. Such options totaled 4,966,829 shares as of March 31, 2009, and 4,772,065 shares as of March 31, 2008. Outstanding Common Units have also been excluded from the diluted earnings per share calculation because including such Common Units would also require that the share of GGPLP income attributable to such Common Units be added back to net income therefore resulting in no effect on EPS. Finally, the affect of the exchange feature of the exchangeable senior notes that were issued in April 2007 (Note 4) are also excluded from EPS because the conditions for exchange were not satisfied as of March 31, 2009 and 2008.

Transactions With Affiliates

Management and other fees primarily represent management and leasing fees, development fees, financing fees and fees for other ancillary services performed for the benefit of certain of the Unconsolidated Real Estate Affiliates and for properties owned by third parties. Fees earned from the Unconsolidated Properties totaled $16.8 million for the three months ended March 31, 2009 and $19.9 million for the three months ended March 31, 2008. Such fees are recognized as revenue when earned.

GENERAL GROWTH PROPERTIES, INC.

NOTE 2 INTANGIBLES ASSETS AND LIABILITIES

The following table summarizes our intangible assets and liabilities:

						Accumulated
		Gross Asset				(Amortization)/				Net Carrying
		(Liability)				Accretion				Amount
		(In thousands)
As of March 31, 2009
Tenant leases:
In-place value		$	622,840			$	(375,650	)		$	247,190
Above-market			112,891				(67,025	)			45,866
Below-market			(198,931	)			116,471				(82,460	)
Ground leases:
Above-market			(16,968	)			2,069				(14,899	)
Below-market			271,602				(25,518	)			246,084
Real estate tax stabilization agreement			91,879				(17,329	)			74,550
As of December 31, 2008
Tenant leases:
In-place value		$	637,791			$	(381,027	)		$	256,764
Above-market			117,239				(65,931	)			51,308
Below-market			(199,406	)			110,650				(88,756	)
Ground leases:
Above-market			(16,968	)			1,951				(15,017	)
Below-market			271,602				(24,049	)			247,553
Real estate tax stabilization agreement			91,879				(16,348	)			75,531

The gross asset balances of the in-place value of tenant leases are included in Buildings and equipment in our Consolidated Balance Sheets. The above-market and below-market tenant and ground leases are included in Prepaid expenses and other assets and Accounts payable and accrued expenses (Note 7) in our consolidated financial statements.

Amortization/accretion of these intangible assets and liabilities, and similar assets and liabilities from our Unconsolidated Real Estate Affiliates at our share, decreased our income (excluding the impact of noncontrolling interests and the provision for income taxes) by $14.5 million for the three months ended March 31, 2009 and $17.7 million for the three months ended March 31, 2008.

Future amortization, including our share of such items from Unconsolidated Real Estate Affiliates, is estimated to decrease income (excluding the impact of noncontrolling interests and the provision for income taxes) by approximately $65.7 million in 2009, $58.1 million in 2010, $47.7 million in 2011, $38.9 million in 2012 and $31.7 million in 2013.

NOTE 3 UNCONSOLIDATED REAL ESTATE AFFILIATES

The Unconsolidated Real Estate Affiliates include our noncontrolling investments in real estate joint ventures. Generally, we share in the profits and losses, cash flows and other matters relating to our investments in Unconsolidated Real Estate Affiliates in accordance with our respective ownership percentages. We manage most of the properties owned by these joint ventures. As we have joint interest and control of these ventures with our venture partners and they have substantive participating rights in such ventures, we account for these joint ventures using the equity method. Some of the joint ventures have elected to be taxed as REITs.

In certain circumstances, we have debt obligations in excess of our pro rata share of the debt of our Unconsolidated Real Estate Affiliates (“Retained Debt”). This Retained Debt represents distributed debt proceeds of the Unconsolidated Real Estate Affiliates in excess of our pro rata share of the non-recourse mortgage indebtedness of such Unconsolidated Real Estate Affiliates. The proceeds of the Retained Debt which are distributed to us are included as a reduction in our investment in Unconsolidated Real Estate Affiliates. In the event that the Unconsolidated Real Estate Affiliates do not generate sufficient cash flow to pay debt service,

GENERAL GROWTH PROPERTIES, INC.

by agreement with our partners, our distributions may be reduced or we may be required to contribute funds in an amount equal to the debt service on Retained Debt. Such Retained Debt totaled $160.1 million as of March 31, 2009 and $160.8 million as of December 31, 2008, and has been reflected as a reduction in our investment in Unconsolidated Real Estate Affiliates. In certain other circumstances, the Company, in connection with the debt obligations of certain Unconsolidated Real Estate Affiliates, has agreed to provide supplemental guarantees or master-lease commitments to provide to the debt holders additional credit-enhancement or security. As of March 31, 2009, we did not expect to be required to perform pursuant to any of such supplemental credit-enhancement provisions for our Unconsolidated Real Estate Affiliates.

Generally, we anticipate that the 2009 operations of our joint venture properties will support the operational cash needs of the properties, including debt service payments. However, based on the liquidity concerns (Note 1) of the Company, there can be no assurance that we will have the ability to fully fund the capital requirements of all of our joint ventures if the needs arise.

The significant accounting policies used by the Unconsolidated Real Estate Affiliates are the same as ours.

GENERAL GROWTH PROPERTIES, INC.

Condensed Combined Financial Information of Unconsolidated Real Estate Affiliates
Following is summarized financial information for our Unconsolidated Real Estate Affiliates as of March 31, 2009 and December 31, 2008 and for the three months ended March 31, 2009 and 2008.

		March 31,				December 31,
		2009				2008
		(In thousands)
Condensed Combined Balance Sheets — Unconsolidated Real Estate Affiliates
Assets:
Land		$	867,121			$	863,965
Buildings and equipment			7,630,463				7,558,344
Less accumulated depreciation			(1,580,746	)			(1,524,121	)
Developments in progress			527,916				549,719
Net property and equipment			7,444,754				7,447,907
Investment in unconsolidated joint ventures			261,834				241,786
Investment property and property held for development and sale			284,893				282,636
Net investment in real estate			7,991,481				7,972,329
Cash and cash equivalents			251,918				231,500
Accounts and notes receivable, net			151,009				163,749
Deferred expenses, net			172,996				173,213
Prepaid expenses and other assets			229,985				225,809
Total assets		$	8,797,389			$	8,766,600
Liabilities and Owners’ Equity:
Mortgages, notes and loans payable		$	6,468,809			$	6,411,631
Accounts payable, accrued expenses and other liabilities			474,492				513,538
Owners’ equity			1,854,088				1,841,431
Total liabilities and owners’ equity		$	8,797,389			$	8,766,600
Investment In and Loans To/From Unconsolidated Real Estate Affiliates, Net:
Owners’ equity		$	1,854,088			$	1,841,431
Less joint venture partners’ equity			(926,200	)			(915,690	)
Capital or basis differences and loans			904,543				911,894
Investment in and loans to/from Unconsolidated Real Estate Affiliates, net		$	1,832,431			$	1,837,635
Reconciliation — Investment In and Loans To/From Unconsolidated Real Estate Affiliates:
Asset — Investment in and loans to/from Unconsolidated Real Estate Affiliates		$	1,864,353			$	1,869,929
Liability — Investment in and loans to/from Unconsolidated Real Estate Affiliates			(31,922	)			(32,294	)
Investment in and loans to/from Unconsolidated Real Estate Affiliates, net		$	1,832,431			$	1,837,635

GENERAL GROWTH PROPERTIES, INC.

		Three Months Ended March 31,
		2009				2008
		(In thousands)
Condensed Combined Statements of Income - Unconsolidated Real Estate Affiliates
Revenues:
Minimum rents		$	189,660			$	186,127
Tenant recoveries			86,597				82,543
Overage rents			1,559				2,354
Land sales			9,716				44,034
Management and other fees			7,317				10,423
Other			23,165				26,215
Total revenues			318,014				351,696
Expenses:
Real estate taxes			27,077				23,998
Repairs and maintenance			18,522				19,820
Marketing			3,118				4,747
Other property operating costs			55,809				58,006
Land sales operations			10,097				26,400
Provision for doubtful accounts			2,592				615
Property management and other costs			18,775				20,237
General and administrative			7,860				6,180
Provisions for impairment			2,900				—
Depreciation and amortization			67,473				57,589
Total expenses			214,223				217,592
Operating income			103,791				134,104
Interest income			1,768				3,430
Interest expense			(84,645	)			(84,573	)
Provision for income taxes			(240	)			(1,761	)
Equity in income of unconsolidated joint ventures			7,773				6,391
Income from continuing operations			28,447				57,591
Discontinued operations, net of noncontrolling interests			—				—
Net income			28,447				57,591
Allocation to noncontrolling interests			(287	)			75
Net income attributable to joint venture partners		$	28,160			$	57,666
Equity In Income (loss) of Unconsolidated Real Estate Affiliates:
Net income attributable to joint venture partners		$	28,160			$	57,666
Joint venture partners’ share of income			(15,063	)			(29,945	)
Amortization of capital or basis differences			(5,257	)			(3,607	)
Elimination of Unconsolidated Real Estate Affiliates loan interest			(302	)			(286	)
Equity in income of Unconsolidated Real Estate Affiliates		$	7,538			$	23,828

Condensed Financial Information of Individually Significant Unconsolidated Real Estate Affiliates

Following is summarized financial information for GGP/Homart II L.L.C. (“GGP/Homart II”), GGP-TRS L.L.C. (“GGP/Teachers”) and The Woodlands Land Development Holdings, L.P. (“The Woodlands Partnership”). We account for these joint ventures using the equity method because we have joint interest and control of these ventures with our venture partners and they have substantive participating rights in such ventures. For financial reporting purposes, we consider each of these joint ventures to be an individually significant Unconsolidated Real Estate Affiliate. Our investment in such affiliates varies from a strict ownership percentage due to capital or basis differences or loans and related amortization.

GENERAL GROWTH PROPERTIES, INC.

		GGP/Homart II
		March 31,				December 31,
		2009				2008
		(In thousands)
Assets:
Land		$	239,481			$	239,481
Buildings and equipment			2,786,757				2,761,838
Less accumulated depreciation			(502,944	)			(482,683	)
Developments in progress			57,792				85,676
Net investment in real estate			2,581,086				2,604,312
Cash and cash equivalents			40,398				42,836
Accounts and notes receivable, net			45,775				45,025
Deferred expenses, net			83,571				84,902
Prepaid expenses and other assets			17,584				27,411
Total assets		$	2,768,414			$	2,804,486
Liabilities and Owners’ Equity:
Mortgages, notes and loans payable		$	2,263,804			$	2,269,989
Accounts payable, accrued expenses and other liabilities			67,349				80,803
Owners’ equity			437,261				453,694
Total liabilities and owners’ equity		$	2,768,414			$	2,804,486

		GGP/Homart II
		Three Months Ended March 31,
		2009				2008
		(In thousands)
Revenues:
Minimum rents		$	61,625			$	60,994
Tenant recoveries			28,800				27,497
Overage rents			521				313
Other			1,958				2,199
Total revenues			92,904				91,003
Expenses:
Real estate taxes			9,315				8,134
Repairs and maintenance			5,899				6,496
Marketing			1,166				1,516
Other property operating costs			9,820				11,265
Provision for doubtful accounts			736				(22	)
Property management and other costs			5,763				5,583
General and administrative			125				1,659
Provisions for impairment			511				—
Depreciation and amortization			24,748				21,843
Total expenses			58,083				56,474
Operating income			34,821				34,529
Interest income			1,343				1,840
Interest expense			(30,258	)			(30,948	)
Provision for income taxes			(106	)			(1,047	)
Net income			5,800				4,374
Allocation to noncontrolling interests			2				(4	)
Net income attributable to joint venture partners		$	5,802			$	4,370