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Press release from Business Wire

General Growth Properties Reports Third Quarter 2010 Operating Results

Friday, October 29, 2010

General Growth Properties Reports Third Quarter 2010 Operating Results05:50 EDT Friday, October 29, 2010 CHICAGO (Business Wire) -- General Growth Properties (NYSE: GGP) today announced operating results for the three months ending September 30, 2010. For the third quarter of 2010, Retail and Other Segment net operating income (NOI) was $581.8 million compared to $582.9 million for the third quarter of 2009. Loss per share was $0.73 in the third quarter of 2010 compared to a loss of $0.38 in the third quarter of 2009. Core Funds from Operations (Core FFO) were losses of $29.3 million in the third quarter of 2010 compared to a positive $88.9 million in the third quarter of 2009. Decreases in the third quarter of 2010 were primarily the result of net incremental reorganization expense items of approximately $79.9 million and incremental accrued interest expense (related to final consensual plans of reorganization which were approved on October 21, 2010) of approximately $83.7 million. During the quarter, tenant sales at comparable properties increased by 10.2% over the third quarter of 2009, building on the year-over-year sales growth momentum in the first and second quarter of 7.5% and 7.8% respectively. A schedule showing adjustments and non-comparable income and expense items and their impact on 2010 and 2009 NOI from the Retail and Other Segment is provided with this release. Concurrent with this release, the Company has made available on its website its quarterly package of supplemental financial information, which provides additional operational result detail. THIRD QUARTER 2010 AND 2009 COMPARABLE RETAIL AND OTHER SEGMENT NOI     ($ in thousands) 2010     2009 Retail and Other Segment NOI $ 581,829     $ 582,852 Adjustments (15,469)     (10,498) Comparable Retail and Other Segment NOI $ 566,360     $ 572,354 Decrease in Comparable Retail and Other Segment NOI (1.0%)       “GGP's underlying operating performance continues to improve. We are particularly pleased with the improving retail sales performance of our malls,” said Adam Metz, chief executive officer of GGP. “Comparable tenant sales rose more than 10 percent in the quarter from the same quarter in 2009, which is evidence that our operational strategy is working. During the restructuring, GGP's employees remained very focused on maintaining high standards at our properties to ensure that they continue to perform for our shoppers and retailers. I am happy to report that we accomplished that. We expect these sales results to drive rents on a long-term basis, which bodes well for the future performance of ‘new' GGP once it emerges from bankruptcy early next month. As the next management team takes the helm, I am confident that GGP has a strong financial and operational foundation for a successful future.” As previously announced on October 28, 2010, Sandeep Mathrani will become the chief executive officer of the “new” GGP at the beginning of 2011. Mr. Metz will step down as CEO at the end of the year. CORE FFO, FFO AND EPS HIGHLIGHTSCore FFO for the third quarter of 2010 was a loss of $29.3 million, or a loss of $0.09 per fully diluted share, compared to a positive $88.9 million, or $0.28 per fully diluted share, for the third quarter of 2009. Core FFO excludes results from the Master Planned Communities segment and the (provision for) benefit from income taxes. FFO was a loss of $27.8 million in the third quarter of 2010 compared to $100.2 million in the third quarter of 2009,a decrease of approximately $128 million. The primary drivers for these quarterly decreases were an increase of approximately $79.9 million in net reorganization expense items in 2010 and the recognition of approximately $83.7 million of incremental accrued interest expense related to loans of debtors which have had their consensual plans of reorganization recently confirmed by the Bankruptcy Court. Such increases were partially offset by a reduction in aggregate provisions for impairment of approximately $56.3 million compared to third quarter 2009. EPS were a loss of $0.73 in the third quarter of 2010 compared to a loss of $0.38 in the third quarter of 2009. A substantial majority of the additional loss in EPS in 2010 was due to the items listed in the attached supplemental comparative schedule of matters affecting NOI, Core FFO and FFO described above. CAPITAL TRANSACTIONS During the third quarter of 2010, General Growth Properties, on behalf of certain of its Unconsolidated Joint Ventures, refinanced three individual secured mortgage loans totaling approximately $615 million at a weighted average interest rate of approximately 4.66% and at a weighted average term of approximately 10 years. Total net proceeds, at GGP's share, were approximately $98.2 million and the weighted average loan to value ratio at closing was approximately 45%. Also during the quarter, General Growth Properties restructured a $260.0 million secured mortgage loan on behalf of another Unconsolidated Joint Venture, at an interest rate of approximately 6.65%. Total net proceeds, at GGP's share, were approximately ($10.4 million) and the maturity date was extended an additional 5 years. SEGMENT RESULTSRetail and Other SegmentComparable tenant sales on a trailing 12 month basis increased to $426 per square foot or 3.6% compared to the same period last year. On a quarterly basis, comparable tenant sales rose a strong 10.2% year-over-year, with first half momentum growing in the third quarter. Retail Center occupancy increased to 91.4% at September 30, 2010, from 91.3% at September 30,2009. NOI in this segment was $581.8 million for the third quarter of 2010 compared to $582.9 million for the third quarter of 2009. Excluding the items detailed in the attached schedule of significant items that impact comparability, NOI for the third quarter of 2010 declined 1.0% year-over-year primarily due to lower temporary tenant revenue and occupancy and lower NOI at GGP's Special Consideration Properties (the 13 properties identified as underperforming assets as part of our bankruptcy emergence and loan restructuring process). At those properties, aggregate NOI decreased approximately $2.0 million in the third quarter of 2010 compared to the third quarter of 2009. Revenues from consolidated properties declined $1.9 million, or approximately 0.3%, for the third quarter of 2010 to $732.2 million from $734.0 million in the third quarter of 2009. Revenues from unconsolidated properties at the Company's ownership share were $144.2 million for the third quarter of 2010, a decline from $147.6 million in 2009, primarily due to declines in temporary tenant rents. Operational Highlights GGP continues to strengthen its assets and operational performance in order to maximize value over the long term. GGP invests in its properties to enhance their positions in the market and their appeal to shoppers and tenants and is committed to fostering long-lasting relationships with its retail partners. During the third quarter, the company signed 1.8 million square feet of new and renewal leases. GGP continues to attract some of the nation's leading retailers and new concept stores. In the third quarter, Forever 21 opened five new stores totaling more than 393,000 square feet, including three in Texas (Baybrook Mall and The Woodlands in Houston and North Star Mall in San Antonio). Luxury fashion designer Michael Kors opened five new stores at Oakbrook Center, Park Meadows, Towson Town Center, Staten Island Mall, and Tysons Galleria; and Australian-based retailer Cotton On signed leases to open seven new stores at California and Florida-based properties. The company also opened another new Apple store at Boise Towne Square in September. Master Planned Communities Segment GGP's Master Planned Community segment includes The Woodlands and Bridgeland, both in the Houston metropolitan area; Summerlin in Las Vegas; and Columbia and Emerson in Maryland. This segment also includes the Nouvelle at Natick condominium project in Massachusetts. As a result of the confirmation of GGP's plan of reorganization on October 21, 2010, the projects in this segment will be part of the assets included in The Howard Hughes Corporation (“THHC”), a new company that will be created upon GGP's emergence from bankruptcy. During the quarter, GGP sold 24 units at its Nouvelle Natick condominium project and has executed sales contracts pending for an additional 7 units. Such unit sales yielded recognized revenues of approximately $10.3 million for the third quarter of 2010. Land sale revenues for the third quarter of 2010 were $10.0 million for consolidated master planned communities and $10.8 million (at the Company's ownership share) for The Woodlands, the company's unconsolidated community, compared to $7.4 million and $7.8 million, respectively, for the third quarter of 2009. Increases in land sale revenues for the consolidated master planned communities were largely a result of the collection of participation amounts on previous sales as lot sales to residential builders continue to reflect continued weak overall demand for individual lots. The increases in revenues at The Woodlands are predominantly due to increases in commercial acreage sold, with 11.3 acres sold in 2010 compared to 0.6 acres sold in 2009. NOI fromtheMaster Planned Communities segment for the third quarter of 2010 was $0.5 million for consolidated properties and $2.7 million for the unconsolidated properties, as margins from lot or unit sales did not significantly exceed selling and community/property-specific general and administrative costs, which are largely fixed. SUMMARY OF BANKRUPTCY EMERGENCE PLANS On October 21, 2010, the U.S. Bankruptcy Court for the Southern District of New York confirmed the Company's plan of reorganization. GGP expects to emerge from Chapter 11 restructuring on or around November 8th. GGP will emerge from its financial restructuring with a strong balance sheet and substantially less debt, providing it with a solid financial foundation on which to execute its growth strategy. Upon emergence, GGP will have a significantly improved capital structure, having secured $6.8 billion in equity commitments from Brookfield Asset Management, Fairholme Funds, Pershing Square Capital Management, and The Teacher Retirement System of Texas (and Blackstone, if it elects, as anticipated, to subscribe to a portion of such $6.8 billion in equity). As part of its plan of reorganization, GGP will split upon emergence into two separate publicly traded corporations, a reorganized GGP (“New GGP”) and The Howard Hughes Corporation (“THHC”), with current shareholders receiving common stock in both companies. New GGP will remain the second-largest shopping mall owner and operator in the country, with more than 185 regional malls in 43 states, and will focus on largely stable, income-producing shopping malls and other real estate assets. THHC, a spin-off company, will consist of GGP's portfolio of master planned communities and other strategic real estate development opportunities. The plan of reorganization yields a substantial recovery to current common stockholders of GGP, who will as a group own a majority of the outstanding common stock of THHC and a significant minority of the outstanding common stock of New GGP upon emergence. All pre-petition GGP creditors will be satisfied in full. The restructured loans provide for the repayment of such restructured secured mortgage debt without any prepayment penalties. In addition, the holders of $1.65 billion of certain corporate bonds have elected to either exchange their holdings for new, longer-dated bonds or be reinstated at existing rates, thereby providing the Company an even more attractive maturity profile while allowing the Company to forgo the more costly standby term debt facility it had arranged. EQUITY OFFERING A key feature of the $6.8 billion of new capital to be received pursuant to the investment agreements is a clawback provision that provides GGP with the option to replace up to $2.15 billion of the capital being committed by Fairholme, Pershing Square and Teacher Retirement System of Texas with the proceeds of equity issuances at more advantageous pricing. New GGP has filed a registration statement on Form S-11 with the Securities and Exchange Commission to raise public equity shortly after emergence from Chapter 11. The offering of equity shortly after emergence from Chapter 11 will be made only by means of a prospectus. A registration statement relating to these securities has been filed with the Securities and Exchange Commission but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. The registration statement on Form S-11 may be accessed through the Securities and Exchange Commission's website at www.sec.gov. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. NON-GAAP SUPPLEMENTAL FINANCIAL MEASURES AND DEFINITIONSFUNDS FROM OPERATIONS AND CORE FFO The Company, consistent with real estate industry and investment community preferences, uses FFO as a supplemental measure of operating performance for a Real Estate Investment Trust (REIT). The National Association of Real Estate Investment Trusts (NAREIT) defines FFO as net income (loss) attributable to common stockholders (computed in accordance with Generally Accepted Accounting Principles (GAAP)), excluding gains (or losses) from cumulative effects of accounting changes, extraordinary items and sales of properties, plus real estate related depreciation and amortization and including adjustments for unconsolidated partnerships and joint ventures. The Company considers FFO a supplemental measure for equity REITs and a complement to GAAP measures because it facilitates an understanding of the operating performance of the Company's properties. FFO does not give effect to real estate depreciation and amortization since these amounts are computed to allocate the cost of a property over its useful life. Since values for well-maintained real estate assets have historically increased or decreased based upon prevailing market conditions, the Company believes that FFO provides investors with a clearer view of the Company's operating performance. However, the Company believes that FFO is a less meaningful supplemental measure for the Master Planned Communities segment of its business. FFO does not facilitate an understanding of the operating performance of the Master Planned Communities segment of its business as its primary strategy in this segment is to develop and sell land in a manner that increases the value of the remaining land. In addition, the Master Planned Communities segment of the Company's business is operated within taxable REIT subsidiaries and therefore its (provision for) benefit from income tax expense is largely attributable to this segment of the business. To isolate these parts of the Company from the Retail and Other segment, for which FFO is a relevant measure of operating performance, the Company also uses Core FFO as an operating measure. Core FFO is defined as FFO excluding the NOI from the Master Planned Communities segment and the (provision for) benefit from income taxes. In order to provide a better understanding of the relationship between Core FFO, FFO and GAAP net income (loss), a reconciliation of Core FFO and FFO to GAAP net income (loss) attributable to common stockholders has been provided. Neither Core FFO nor FFO represent cash flow from operating activities in accordance with GAAP, neither should be considered as an alternative to GAAP net income (loss) attributable to common stockholders and neither is necessarily indicative of cash available to fund cash needs. In addition, the Company has presented FFO on a consolidated and unconsolidated basis (at the Company's ownership share) as the Company believes that given the significance of the Company's operations that are owned through investments accounted for on the equity method of accounting, the detail of the operations of the Company's unconsolidated properties provides important insights into the income and FFO produced by such investments for the Company as a whole. REAL ESTATE PROPERTY NET OPERATING INCOME (NOI) AND COMPARABLE NOI The Company believes that NOI is a useful supplemental measure of the Company's operating performance. The Company defines NOI as operating revenues (rental income, land and condominium sales, tenant recoveries and other income) less property and related expenses (real estate taxes, land and condominium sales operating costs, property maintenance costs, marketing and other property expenses). As with FFO described above, NOI has been reflected on a consolidated and unconsolidated basis (at the Company's ownership share). Other REITs may use different methodologies for calculating NOI, and accordingly, the Company's NOI may not be comparable to other REITs. Because NOI excludes general and administrative expenses, interest expense, retail investment property impairment or other non-recoverable development costs, depreciation and amortization, gains and losses from property dispositions, allocations to non-controlling interests, reorganization items, strategic initiatives and extraordinary items, it provides a performance measure that, when compared year over year, reflects the revenues and expenses directly associated with owning and operating commercial real estate properties and the impact on operations from trends in occupancy rates, rental rates, land values (with respect to the Master Planned Communities) and operating costs. This measure thereby provides an operating perspective not immediately apparent from GAAP operating or net income (loss) attributable to common stockholders. The Company uses NOI to evaluate its operating performance on a property-by-property basis because NOI allows the Company to evaluate the impact that factors such as lease structure, lease rates and tenant base, which vary by property, have on the Company's operating results, gross margins and investment returns. In addition, management believes that NOI provides useful information to the investment community about the Company's operating performance. However, due to the exclusions noted above, NOI should only be used as an alternative measure of the Company's financial performance. For reference, and as an aid in understanding management's computation of NOI, a reconciliation of NOI to consolidated operating income (loss) as computed in accordance with GAAP has been presented. Comparable retail and other segment NOI excludes from both years the NOI of properties with significant physical or merchandising changes and those properties acquired or opened during the relevant comparative accounting periods. PROPERTY INFORMATION The Company has presented information on its consolidated and unconsolidated properties separately in the accompanying financial schedules. As a significant portion of the Company's total operations are structured as joint venture arrangements which are unconsolidated, management of the Company believes that operating data with respect to all properties owned provides important insights into the income produced by such investments for the Company as a whole. In addition, the individual items of revenue and expense for the unconsolidated properties have been presented at the Company's ownership share of such unconsolidated ventures. As substantially all of the management operating philosophies and strategies are the same regardless of ownership structure, an aggregate presentation of NOI and other operating statistics yields a more accurate representation of the relative size and significance of such elements of the Company's overall operations. GGP INFORMATION/WEBSITE The Company currently has ownership interest in more than 200 regional shopping malls in 43 states and internationally, as well as ownership in master planned community developments and commercial office buildings. The Company's portfolio totals approximately 200 million square feet of retail space and includes over 24,000 retail stores nationwide. The Company's common stock is currently traded on the New York Stock Exchange under the symbol GGP. For more information, please visit the Company website at http://www.ggp.com. FORWARD LOOKING STATEMENTS This press release contains forward-looking statements. Actual results may differ materially from the results suggested by these forward-looking statements, for a number of reasons, including, but not limited to, our ability to emerge from bankruptcy pursuant to our approved plan of reorganization, our ability to refinance, extend, restructure or repay our short and intermediate term debt, our substantial level of indebtedness, our ability to raise capital through equity issuances, asset sales or the incurrence of new debt, retail and credit market conditions, impairments, our liquidity demands and retail and economic conditions. Readers are referred to the documents filed by General Growth Properties, Inc. with the Securities and Exchange Commission, which further identify the important risk factors which could cause actual results to differ materially from the forward-looking statements in this release. The Company disclaims any obligation to update any forward-looking statements.                           GENERAL GROWTH PROPERTIES, INC.OVERVIEW(In thousands, except per share amounts)           Three Months EndedNine Months EndedSeptember 30,September 30,2010200920102009Funds From Operations ("FFO")   Company stockholders $ (27,209 ) $ 97,963 $ 306,900 $ (7,306 ) Operating Partnership unit holders   (623 )   2,278     7,037     (181 ) Operating Partnership $ (27,832 ) $ 100,241   $ 313,937   $ (7,487 )   (Decrease) increase in FFO over comparable prior year period   (127.8 ) %   (44.0 ) %   4,293.1   %   (101.2 ) %   FFO per share: Company stockholders - basic $ (0.09 ) $ 0.31 $ 0.97 $ (0.02 ) Operating Partnership - basic (0.09 ) 0.31 0.97 (0.02 ) Operating Partnership - diluted (0.09 ) 0.31 0.96 (0.02 ) (Decrease) increase in diluted FFO per share over comparable prior year periods (129.0 ) % (44.6 ) % 4,900.0 % (101.0 ) %   Core Funds From Operations ("Core FFO") Core FFO $ (29,320 ) $ 88,862 $ 327,714 $ 90,530 (Decrease) increase in Core FFO over comparable prior year period (133.0 ) % (55.4 ) % 262.0 % (85.9 ) %   Core FFO per share - diluted (0.09 ) 0.28 1.01 0.28 (Decrease) increase in diluted Core FFO per share over comparable prior year periods (132.1 ) % (54.8 ) % 260.7 % (86.4 ) %   Dividends Dividends paid per share (a) $ - $ - $ 0.19 $ - Payout ratio (% of diluted FFO paid out) - % - % 19.8 % - %   Real Estate Property Net Operating Income ("NOI") Retail and Other: Consolidated $ 486,550 $ 486,356 $ 1,464,210 $ 1,507,480 Unconsolidated   95,279     96,496     294,803     294,165   Total Retail and Other   581,829     582,852     1,759,013     1,801,645   Master Planned Communities: Consolidated 520 (2,173 ) (3,676 ) (111,893 ) Unconsolidated   2,744     (847 )   9,975     4,172   Total Master Planned Communities   3,264     (3,020 )   6,299     (107,721 ) Total Real estate property net operating income $ 585,093   $ 579,832   $ 1,765,312   $ 1,693,924       September 30,December 31,Selected Balance Sheet Information20102009 Cash and cash equivalents $ 630,014 $ 654,396   Investment in real estate: Net land, buildings and equipment $ 21,271,450 $ 21,684,661 Developments in progress 424,616 417,969 Net investment in and loans to/from Unconsolidated Real Estate Affiliates 1,869,381 1,941,024 Investment property and property held for development and sale   1,906,163     1,753,175   Net investment in real estate $ 25,471,610   $ 25,796,829     Total assets $ 27,742,933 $ 28,149,774   Mortgages, notes and loans payable not subject to compromise $ 16,927,928 $ 7,300,772 Mortgages, notes and loans payable subject to compromise (b) 6,932,135 17,155,245 Redeemable noncontrolling interests - Preferred 120,756 120,756 Redeemable noncontrolling interests - Common 115,117 86,077 Total equity   586,385     847,339   Total capitalization (at cost) $ 24,682,321   $ 25,510,189     (a) Represents 2009 dividend declared in December 2009 that was paid in January 2010 (approximately $6.0 million in cash and 4,923,287 shares of common stock). (b) Mortgages, notes and loans payable subject to compromise as of the respective balance sheet dates are for obligations of the Debtors which do not have effective plans of reorganization as of such dates. The contractual principal amount of such mortgages, notes and loans payable reflected as subject to compromise at September 30, 2010, are expected to be $1.86 billion at our projected emergence from bankruptcy on November 8, 2010, as a result of GGP's confirmed plans of reorganization.                   GENERAL GROWTH PROPERTIES, INC.CONSOLIDATED STATEMENTS OF INCOME(In thousands, except per share amounts)         Three Months EndedNine Months EndedSeptember 30,September 30,2010200920102009Revenues: Minimum rents $ 487,433 $ 489,472 $ 1,464,650 $ 1,487,288 Tenant recoveries 217,906 217,040 647,744 674,750 Overage rents 10,333 10,408 28,126 26,214 Land and condominium sales 20,290 7,409 85,325 38,844 Management fees and other corporate revenues 14,075 16,851 48,063 57,569 Other   19,655     19,781     62,337     57,031   Total revenues   769,692     760,961     2,336,245     2,341,696   Expenses: Real estate taxes 71,339 69,925 214,496 210,443 Property maintenance costs 27,176 28,246 89,207 77,704 Marketing 9,043 7,358 22,374 21,840 Other property operating costs 132,441 136,235 387,713 394,414 Land and condominium sales operations 19,770 9,582 89,001 42,046 Provision for doubtful accounts 5,628 5,925 15,575 25,104 Property management and other costs 41,057 44,876 125,007 130,485 General and administrative 9,401 8,324 22,707 22,436 Strategic Initiatives (a) - 3,328 - 67,341 Provisions for impairment 4,620 60,940 35,893 474,420 Depreciation and amortization   175,336     185,016     527,956     576,103   Total expenses   495,811     559,755     1,529,929     2,042,336   Operating income 273,881 201,206 806,316 299,360   Interest income 274 523 1,087 1,754 Interest expense   (413,237 )   (326,357 )   (1,050,241 )   (983,198 ) Loss before income taxes, noncontrolling interests, reorganization items, and equity in income of Unconsolidated Real Estate Affiliates (139,082 ) (124,628 ) (242,838 ) (682,084 ) (Provision for) benefit from income taxes (1,913 ) 14,430 (19,797 ) 10,202 Equity in income of Unconsolidated Real Estate Affiliates 9,789 15,341 60,441 39,218 Reorganization items   (102,517 )   (22,597 )   (93,216 )   (47,515 ) Loss from continuing operations (233,723 ) (117,454 ) (295,410 ) (680,179 ) Discontinued operations - gain (loss) on dispositions   -     29     -     (26 ) Net loss (233,723 ) (117,425 ) (295,410 ) (680,205 ) Allocation to noncontrolling interests   2,538     (422 )   (1,646 )   7,876   Net loss attributable to common stockholders $ (231,185 ) $ (117,847 ) $ (297,056 ) $ (672,329 )   Basic and Diluted Loss Per Share: Continuing operations $ (0.73 ) $ (0.38 ) $ (0.94 ) $ (2.16 ) Discontinued operations   -     -     -     -   Total basic and diluted loss per share $ (0.73 ) $ (0.38 ) $ (0.94 ) $ (2.16 )     (a) Reclassified from general and administrative, as presented in the third quarter 2009, to conform to the 2009 audited financial statement presentation.               GENERAL GROWTH PROPERTIES, INC.PORTFOLIO RESULTS AND FUNDS FROM OPERATIONS ("FFO") (In thousands)       Three Months Ended September 30, 2010ConsolidatedUnconsolidatedSegmentRetail and OtherPropertiesPropertiesBasis Property revenues: Minimum rents $ 487,433 $ 94,000 $ 581,433 Tenant recoveries 217,906 38,364 256,270 Overage rents 10,333 1,065 11,398 Other, including noncontrolling interests   16,505     10,802     27,307   Total property revenues   732,177     144,231     876,408   Property operating expenses: Real estate taxes 71,339 11,047 82,386 Property maintenance costs 27,176 4,840 32,016 Marketing 9,043 2,009 11,052 Other property operating costs 132,441 30,118 162,559 Provision for doubtful accounts   5,628     938     6,566   Total property operating expenses   245,627     48,952     294,579   Retail and other net operating income   486,550     95,279     581,829     Master Planned Communities Land and condominium sales 20,290 10,824 31,114 Land and condominium sales operations   (19,770 )   (8,080 )   (27,850 ) Master Planned Communities net operating income 520 2,744 3,264       Real estate property net operating income $ 487,070   $ 98,023   $ 585,093     Management fees and other corporate revenues 14,075 4,376 Property management and other costs (41,057 ) (8,235 ) General and administrative (9,401 ) (5,095 ) Provisions for impairment (4,620 ) (20 ) Depreciation on non-income producing assets, including headquarters building (2,428 ) - Interest income 274 2,201 Interest expense (413,237 ) (43,698 ) (Provision for) benefit from income taxes (1,913 ) 137 Preferred unit distributions (2,336 ) - Other FFO from noncontrolling interests 528 41 Reorganization items   (102,517 )   -   FFO (75,562 ) 47,730 Equity in FFO of Unconsolidated Properties   47,730     (47,730 ) Operating Partnership FFO $ (27,832 ) $ -       Three Months Ended September 30, 2009ConsolidatedUnconsolidatedSegmentRetail and OtherPropertiesPropertiesBasis Property revenues: Minimum rents $ 489,472 $ 94,264 $ 583,736 Tenant recoveries 217,040 39,718 256,758 Overage rents 10,408 1,442 11,850 Other, including noncontrolling interests (a)   17,125     12,172     29,297   Total property revenues   734,045     147,596     881,641   Property operating expenses: Real estate taxes 69,925 11,775 81,700 Property maintenance costs (b) 28,246 5,024 33,270 Marketing 7,358 1,484 8,842 Other property operating costs (b) 136,235 31,278 167,513 Provision for doubtful accounts   5,925     1,539     7,464   Total property operating expenses   247,689     51,100     298,789   Retail and other net operating income   486,356     96,496     582,852     Master Planned Communities Land and condominium sales 7,409 7,800 15,209 Land and condominium sales operations   (9,582 )   (8,647 )   (18,229 ) Master Planned Communities net operating (loss) income (2,173 ) (847 ) (3,020 )       Real estate property net operating income $ 484,183   $ 95,649   $ 579,832     Management fees and other corporate revenues 16,851 4,267 Property management and other costs (44,876 ) (8,660 ) General and administrative (8,324 ) (1,390 ) Strategic initiatives (c) (3,328 ) - Provisions for impairment (60,940 ) - Depreciation on non-income producing assets, including headquarters building (2,328 ) - Interest income 523 1,040 Interest expense (326,357 ) (36,811 ) Benefit from (provision for) income taxes 14,430 (31 ) Preferred unit distributions (2,336 ) - Other FFO from noncontrolling interests 1,246 30 Reorganization items   (22,597 )   -   FFO 46,147 54,094 Equity in FFO of Unconsolidated Properties   54,094     (54,094 ) Operating Partnership FFO $ 100,241   $ -     (a) 2009 NOI was reduced by $2.4 million of other revenue, which represents joint venture asset management fees that were reclassified to management fees and other corporate revenues to conform to the 2010 presentation. (b) Other property operating costs were increased by $32.0 million of expenses primarily related to cleaning and janitorial costs that were reclassified from property maintenance costs to conform to the 2010 presentation. (c) Reclassified from general and administrative, as presented in the third quarter 2009, to conform to the 2009 audited financial statement presentation.               GENERAL GROWTH PROPERTIES, INC.PORTFOLIO RESULTS AND FUNDS FROM OPERATIONS ("FFO") (In thousands)       Nine Months Ended September 30, 2010ConsolidatedUnconsolidatedSegmentRetail and OtherPropertiesPropertiesBasis Property revenues: Minimum rents $ 1,464,650 $ 288,606 $ 1,753,256 Tenant recoveries 647,744 115,135 762,879 Overage rents 28,126 3,251 31,377 Other, including noncontrolling interests   53,055     33,143     86,198   Total property revenues   2,193,575     440,135     2,633,710   Property operating expenses: Real estate taxes 214,496 35,711 250,207 Property maintenance costs 89,207 14,721 103,928 Marketing 22,374 4,637 27,011 Other property operating costs 387,713 87,198 474,911 Provision for doubtful accounts   15,575     3,065     18,640   Total property operating expenses   729,365     145,332     874,697   Retail and other net operating income   1,464,210     294,803     1,759,013     Master Planned Communities Land and condominium sales 85,325 36,796 122,121 Land and condominium sales operations   (89,001 )   (26,821 )   (115,822 ) Master Planned Communities net operating income (3,676 ) 9,975 6,299       Real estate property net operating income 1,460,534 304,778 $ 1,765,312     Management fees and other corporate revenues 48,063 14,069 Property management and other costs (125,007 ) (27,106 ) General and administrative (22,707 ) (4,572 ) Provisions for impairment (35,893 ) (441 ) Depreciation on non-income producing assets, including headquarters building (7,221 ) - Interest income 1,087 5,361 Interest expense (1,050,241 ) (129,432 ) Provision for income taxes (19,797 ) (279 ) Preferred unit distributions (7,006 ) - Other FFO from noncontrolling interests 2,865 98 Reorganization items   (93,216 )   -   FFO 151,461 162,476 Equity in FFO of Unconsolidated Properties   162,476     (162,476 ) Operating Partnership FFO $ 313,937   $ -       Nine Months Ended September 30, 2009ConsolidatedUnconsolidatedSegmentRetail and OtherPropertiesPropertiesBasis Property revenues: Minimum rents $ 1,487,288 $ 288,698 $ 1,775,986 Tenant recoveries 674,750 119,259 794,009 Overage rents 26,214 3,632 29,846 Other, including noncontrolling interests (a)   48,733     37,813     86,546   Total property revenues   2,236,985     449,402     2,686,387   Property operating expenses: Real estate taxes 210,443 36,620 247,063 Property maintenance costs (b) 77,705 14,023 91,728 Marketing 21,840 4,234 26,074 Other property operating costs (b) 394,413 95,768 490,181 Provision for doubtful accounts   25,104     4,592     29,696   Total property operating expenses   729,505     155,237     884,742   Retail and other net operating income   1,507,480     294,165     1,801,645     Master Planned Communities Land and condominium sales 38,844 26,320 65,164 Land and condominium sales operations   (42,046 )   (22,148 )   (64,194 ) Master Planned Communities net operating income (3,202 ) 4,172 970   Provision for impairment   (108,691 )   -     (108,691 ) Master Planned Communities net operating (loss) income (111,893 ) 4,172 (107,721 )       Real estate property net operating income 1,395,587 298,337 $ 1,693,924     Management fees and other corporate revenues 57,569 12,195 Property management and other costs (130,485 ) (26,960 ) General and administrative (22,436 ) (8,133 ) Strategic initiatives (c) (67,341 ) - Provisions for impairment (365,729 ) (3,206 ) Depreciation on non-income producing assets, including headquarters building (7,201 ) - Interest income 1,754 2,972 Interest expense (983,198 ) (120,395 ) Benefit from (provision for) income taxes 10,202 (498 ) Preferred unit distributions (7,007 ) - Other FFO from noncontrolling interests 3,912 89 Reorganization items   (47,515 )   -   FFO (161,888 ) 154,401 Equity in FFO of Unconsolidated Properties   154,401     (154,401 ) Operating Partnership FFO $ (7,487 ) $ -     (a) 2009 NOI was reduced by $8.0 million of other revenue, which represents joint venture asset management fees that were reclassified to management fees and other corporate revenues to conform to the 2010 presentation. (b) Other property operating costs were increased by $95.7 million of expenses primarily related to cleaning and janitorial costs that were reclassified from property maintenance costs to conform to the 2010 presentation. (c) Reclassified from general and administrative, as presented in the third quarter 2009, to conform to the 2009 audited financial statement presentation.                   GENERAL GROWTH PROPERTIES, INC.SUPPLEMENTAL DISCLOSURE OF CERTAIN NON-CASH REVENUES AND EXPENSES REFLECTED IN FFO (In thousands)         Three Months EndedThree Months EndedSeptember 30, 2010   September 30, 2009ConsolidatedUnconsolidatedConsolidatedUnconsolidatedPropertiesPropertiesPropertiesPropertiesMinimum rents: Above- and below-market tenant leases, net $ 1,318 $ (127 ) $ 2,737 $ 384 Straight-line rent 8,035 3,067 8,480 2,998 Real estate taxes: Real estate tax stabilization agreement (981 ) - (981 ) - Other property operating costs: Non-cash ground rent expense (1,570 ) (249 ) (1,576 ) (247 ) Provisions for impairment (4,620 ) (20 ) (60,940 ) - Interest expense: Mark-to-market adjustments on debt (18,734 ) 2,071 3,294 155 Amortization of deferred finance costs (2,528 ) (523 ) (9,916 ) (396 ) Amortization of discount on exchangeable notes (7,329 ) - (6,897 ) - Termination of interest rate swaps (596 ) - (4,519 ) - Debt extinguishment costs (8,850 ) (31 ) - - Non-cash reorganization items   (71,132 )   -     7,062     -   Totals $ (106,987 ) $ 4,188   $ (63,256 ) $ 2,894       Nine Months EndedNine Months EndedSeptember 30, 2010September 30, 2009ConsolidatedUnconsolidatedConsolidatedUnconsolidatedPropertiesPropertiesPropertiesPropertiesMinimum rents: Above- and below-market tenant leases, net $ 4,403 $ (42 ) $ 6,094 $ 3,317 Straight-line rent 27,153 8,117 27,173 9,523 Real estate taxes: Real estate tax stabilization agreement (2,943 ) - (2,943 ) - Other property operating costs: Non-cash ground rent expense (4,702 ) (642 ) (4,740 ) (927 ) Provisions for impairment (35,893 ) (441 ) (474,420 ) (3,206 ) Interest expense: Mark-to-market adjustments on debt (9,912 ) 2,284 9,357 1,486 Amortization of deferred finance costs (18,880 ) (1,361 ) (35,889 ) (1,221 ) Amortization of discount on exchangeable notes (21,619 ) - (20,347 ) - Termination of interest rate swaps (9,636 ) - 14,156 - Debt extinguishment costs (9,007 ) (31 ) (578 ) - Non-cash reorganization items   127,401     -     (24,114 )   -   Totals $ 46,365   $ 7,884   $ (506,251 ) $ 8,972                         SUPPLEMENTAL SCHEDULE OF MANAGEMENT AND ADMINISTRATIVE COSTS, NET (In thousands)   Three Months EndedThree Months EndedSeptember 30, 2010September 30, 2009ConsolidatedUnconsolidatedConsolidatedUnconsolidatedPropertiesPropertiesPropertiesProperties Management fees and other corporate revenues, net (a) $ 8,434 $ 4,376 $ 11,210 $ 4,267 Property management and other costs (41,057 ) (2,594 ) (44,876 ) (3,019 ) General and administrative   (9,401 )   (5,095 )   (8,324 )   (1,390 ) Total management and administrative costs, net $ (42,024 ) $ (3,313 ) $ (41,990 ) $ (142 )     Nine Months EndedNine Months EndedSeptember 30, 2010September 30, 2009ConsolidatedUnconsolidatedConsolidatedUnconsolidatedPropertiesPropertiesPropertiesProperties Management fees and other corporate revenues, net (a) $ 30,737 $ 14,069 $ 40,076 $ 12,195 Property management and other costs (125,007 ) (9,780 ) (130,485 ) (9,467 ) General and administrative   (22,707 )   (4,572 )   (22,436 )   (8,133 ) Total management and administrative costs, net $ (116,977 ) $ (283 ) $ (112,845 ) $ (5,405 )   (a) Management and other fees are net of property management fee expense incurred by the unconsolidated properties, at our ownership share, which are reflected as a component of property management and other costs in unconsolidated properties. Such amounts are $5.6 million for the three months ended September 30, 2010, $5.6 million for the three months ended September 30, 2009, $17.3 million for the nine months ended September 30, 2010, and $17.5 million for the nine months ended September 30, 2009.       GENERAL GROWTH PROPERTIES, INC.SUPPLEMENTAL SCHEDULE OF SIGNIFICANT ITEMS THAT IMPACT COMPARABILITY (a) (In thousands, except per share amounts)       Three Months EndedNine Months EndedSeptember 30,September 30,2010200920102009   Retail and other net operating income $ 581,829 $ 582,852 $ 1,759,013 $ 1,801,645   Retail and other net operating income adjustments: Net operating income from noncomparable properties (10,401 ) (9,855 ) (31,810 ) (33,937 ) Corporate and other (773 ) 3,216 (624 ) 3,963 Termination income   (4,295 )   (3,859 )   (25,127 )   (24,053 ) Total Retail and other net operating income adjustments   (15,469 )   (10,498 )   (57,561 )   (54,027 )         Comparable retail and other net operating income $ 566,360   $ 572,354   $ 1,701,452   $ 1,747,618       Core FFO $ (29,320 ) $ 88,862 $ 327,714 $ 90,530   Core FFO adjustments: Retail and other net operating income adjustments (15,469 ) (10,498 ) (57,561 ) (54,027 ) Provisions for impairment: Operating properties 4,516 18,161 35,290 139,583 Non-recoverable development and pre-development costs 124 36,496 1,044 94,318 Goodwill   -     6,283     -     135,034   Core FFO provisions for impairment 4,640 60,940 36,334 368,935   Reorganization items (b) Gains on liabilities subject to compromise - vendors 188 (2,670 ) (6,687 ) (5,049 ) Gains on liabilities subject to compromise - mortgage debt (4,309 ) - (323,319 ) - Restructuring costs 105,287 23,864 419,125 50,071 Interest income (72 ) (16 ) (162 ) (23 ) U.S. Trustee fees   1,423     1,419     4,259     2,516   Total reorganization items 102,517 22,597 93,216 47,515   Strategic initiatives (c) - 3,328 - 67,341   Termination of interest rate swaps - - - 34,813 Accrued interest expense related to the plan 83,739 - 83,739 - Total Core FFO adjustments   175,427     76,367     155,728     464,577   Comparable Core FFO $ 146,107   $ 165,229   $ 483,442   $ 555,107           Comparable Core FFO per share - diluted $ 0.45   $ 0.52   $ 1.48   $ 1.74       (a) Includes consolidated and unconsolidated properties. (b) Reorganization items reflect bankruptcy-related activity, including gains on liabilities subject to compromise, interest income, U.S. Trustee fees, and other restructuring costs, incurred after filing for Chapter 11 protection on April 16, 2009. (c) Strategic initiatives include fees and expenses incurred for various consultants and advisors who assisted in the development of strategic alternatives prior to filing for Chapter 11 protection.                   GENERAL GROWTH PROPERTIES, INC.RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES (In thousands)       Three Months EndedNine Months EndedSeptember 30,   September 30,2010200920102009Reconciliation of Real Estate Property Net Operating Income ("NOI") to GAAP Operating Income (Loss) Real estate property net operating income: Segment basis $ 585,093 $ 579,832 $ 1,765,312 $ 1,693,924 Unconsolidated Properties   (98,023 )   (95,649 )   (304,778 )   (298,337 ) Consolidated Properties 487,070 484,183 1,460,534 1,395,587 Management fees and other corporate revenues 14,075 16,851 48,063 57,569 Property management and other costs (41,057 ) (44,876 ) (125,007 ) (130,485 ) General and administrative (9,401 ) (8,324 ) (22,707 ) (22,436 ) Strategic Initiatives - (3,328 ) - (67,341 ) Provisions for impairment (4,620 ) (60,940 ) (35,893 ) (365,729 ) Depreciation and amortization (175,336 ) (185,016 ) (527,956 ) (576,103 ) Noncontrolling interest in NOI of Consolidated Properties and other   3,150     2,656     9,282     8,298   Operating income $ 273,881   $ 201,206   $ 806,316   $ 299,360       Reconciliation of Core FFO to Funds From Operations ("FFO") and to GAAP Net Income (Loss) Attributable to Common Stockholders Core FFO $ (29,320 ) $ 88,862 $ 327,714 $ 90,530 Master Planned Communities net operating loss 3,264 (3,020 ) 6,299 (107,721 ) Provision for income taxes   (1,776 )   14,399     (20,076 )   9,704   Funds From Operations - Operating Partnership (27,832 ) 100,241 313,937 (7,487 ) Depreciation and amortization of capitalized real estate costs (211,169 ) (221,460 ) (634,208 ) (684,142 ) Gains (losses) on sales of investment properties (a) 757 29 12,683 (26 ) Noncontrolling interests in depreciation of Consolidated Properties and other 1,734 862 3,696 2,629 Redeemable noncontrolling interests   5,325     2,481     6,836     16,697   Net loss attributable to common stockholders $ (231,185 ) $ (117,847 ) $ (297,056 ) $ (672,329 )     Reconciliation of Equity in NOI of Unconsolidated Properties to GAAP Equity in Income of Unconsolidated Real Estate Affiliates Equity in Unconsolidated Properties: NOI $ 98,023 $ 95,649 $ 304,778 $ 298,337 Net property management fees and costs (3,859 ) (4,393 ) (13,037 ) (14,765 ) Net interest expense (41,497 ) (35,771 ) (124,071 ) (117,423 ) General and administrative, provisions for impairment, income taxes and noncontrolling interest in FFO   (4,937 )   (1,391 )   (5,194 )   (11,748 ) FFO of unconsolidated properties 47,730 54,094 162,476 154,401 Depreciation and amortization of capitalized real estate costs (38,261 ) (38,770 ) (113,473 ) (115,239 ) Other, including gains on sales of investment properties (a)   320     17     11,438     56   Equity in income of Unconsolidated Real Estate Affiliates $ 9,789   $ 15,341   $ 60,441   $ 39,218     Reconciliation of Weighted Average Shares Outstanding Basic: Weighted average number of shares outstanding - FFO per share 324,658 319,628 324,114 319,606 Conversion of Operating Partnership units   (7,265 )   (7,265 )   (7,265 )   (7,745 ) Weighted average number of Company shares outstanding - GAAP EPS   317,393     312,363     316,849     311,861     Diluted: Weighted average number of shares outstanding - FFO per share 326,137 319,628 325,567 319,606 Conversion of Operating Partnership units (7,265 ) (7,265 ) (7,265 ) (7,745 ) Effect of dilutive securities - options   (1,479 )   -     (1,453 )   -   Weighted average number of Company shares outstanding - GAAP EPS   317,393     312,363     316,849     311,861     (a) Included in such amounts for the nine months ended September 30, 2010 is $9.7 million of gain, which is recognized because our Brazilian joint venture issued common stock with an issue price in excess of our carrying value per share of our investment in such venture. General Growth Properties, Inc.David Keating, Vice President of Corporate Communications(312) 960-6325david.keating@ggp.com