2013 ANNUAL REPORT Our mission is to own and operate best-in-class retail properties that provide an outstanding environment and experience for our Communities, Retailers, Employees, Consumers and Shareholders. 1 FINANCIAL HIGHLIGHTS 2013 2012 Total property revenues $3,021,034 $2,908,556 Total property operating expenses $832,423 $824,257 Net operating income (NOI) $2,188,611 $2,084,299 EBITDA $2,015,379 $1,932,008 Funds From Operations (FFO) $1,147,671 $991,716 Same store NOI $2,111,519 $1,992,893 Total equity capitalization $18,384,702 $20,230,604 Total capitalization $37,049,610 $40,228,494 Common Stock Price at December 31 $20.07 $19.85 Cash dividends per share $0.51 $0.42 Amounts represent GGP’s pro rata share. Net operating income, EBITDA and FFO are non-GAAP financial measures. Reconciliations to the most comparable GAAP measure are included in the Form 10-K, included herein. Amounts in thousands, except per share amounts. 2 3 GLENDALE GALLERIA DEAR SHAREHOLDER, Today, GGP is a pure-play owner of high-quality Our efforts to decrease the size of our portfolio have, regional malls in the U.S. This is the result of our strict in turn, increased the quality of our earnings. In 2013, adherence to our mission to own and operate best- approximately 96% of our total net operating income in-class retail properties that provide an outstanding was generated from our shopping malls, compared environment and experience for our Communities, to 85% in 2010. Retailers, Employees, Consumers and Shareholders. It is also the result of our employees’ commitment to 2010 2013 GGP’s five core values: High Performance, Attitude, Do the Right Thing, Together and Own It. We believe A Smaller, High-Quality Portfolio(a) an organization can achieve and exceed its goals by U.S. Malls 169 120 having a winning culture. Other properties 72 19 Creates Greater Earnings Quality(b) PORTFOLIO OVERVIEW U.S. Mall NOI - % of total NOI 85% 96% a) Figures for 2010 are as of December 31, 2010. Figures for 2013 are as of December 31, 2013. Since 2010, we have significantly pruned our portfolio b) Figures for 2010 are based on full year 2010 Company NOI. Figures for 2013 are based on full by selling or otherwise disposing of malls, office year 2013 Company NOI. properties, retail strip centers and non-U.S. investments that do not fit within our asset focus. We constantly Our regional mall portfolio today consists of several review our portfolio to identify opportunities to recycle of the most valuable retail properties in the U.S. We capital from lower-growth into higher-growth assets. own 95 of the 463 highest quality shopping malls 5 in the U.S. (approximately 20%), which provides us billion at share. In addition, we have used financing with a valuable large-scale retail property platform. proceeds to repay corporate unsecured bonds and These 95 high-quality shopping malls account for invest in the portfolio through development activities, approximately 85% of our total net operating income. opportunistic acquisitions, and stock repurchases. Today, the remaining average term to maturity of our debt is the longest in our sector at more than seven QUALITY SALES % OF years, and our debt is comprised primarily of fixed rate, GRADE MALLS(a) PSF(b) MALL NOI(c) property-secured loans. A 73 $660 72% B+ 22 400 13% $3.0 B 25 370 15% $2.0 $2.1 120 $564 100% $1.9 $1.7 $1.6 a) Source: GGP Supplemental Information as of December 31, 2013. Total mall portfolio of 120 malls $1.0 includes one mall currently undergoing redevelopment and is therefore excluded from metrics. $0.9 $1.0 $0.5 $0.9 b) Comparative rolling twelve month sales for mall stores less than 10,000 square feet. $0.4 c) % based on full year 2013 NOI. $0.2 20 20 20 20 20 20 20 20 20 20 20 20 20 Our mall portfolio contains flagship assets such as Ala 14 15 16 17 18 19 20 21 22 23 24 25 26+ Moana Center in Hawaii, a retail destination for more than 42 million shoppers a year; Glendale Galleria in DEBT MATURITY LADDER ($ BILLIONS) Los Angeles, where Apple opened one of its first retail stores in 2001; Fashion Show in Las Vegas, the only traditional mall on the Vegas Strip; and Water Tower Overall, total leverage is approximately 50% of the Place on Michigan Avenue in Chicago, one of the total enterprise value. Our relatively long maturity country’s most successful vertical shopping malls. schedule is by design; it ensures that we will not face an inordinate amount of debt in any given year. We believe our general financing policy to obtain single FINANCIAL RESULTS property mortgages at a fixed rate with no corporate recourse has resulted in a strong balance sheet with In 2013, GGP’s Funds from Operations per share relatively low risk. Our net debt-to-EBITDA ratio has increased more than 18% to $1.16 per diluted share(1) decreased from 11 in early 2011 to less than 9. If and was $50 million higher than our initial guidance the ratio reflected the time value of our long debt for the year. We reported a higher than expected level maturity schedule, our net debt-to-EBITDA ratio would of same store net operating income growth of 6.0%, be less than 5(2). driven primarily by higher permanent occupancy, positive suite-to-suite rent spreads and operational Capping these financial accomplishments, in efficiencies. Total earnings before interest, taxes, December 2013, GGP was added to Standard & depreciation and amortization increased 4.3%(1) and Poor’s 500 Index. We are proud of this honor, which funds from operations increased 15.7%(1) compared recognizes our progress. to 2012. As a result of our earnings growth, we increased our quarterly dividend three times, resulting Our expectations for 2014 are based on the following: in a 27% total increase (from 11 cents paid in the first · increasing permanent occupancy to 93%; quarter 2013 to 14 cents paid in the first quarter 2014). · same store NOI growth of 4% to 4.5%; · approximately 4% EBITDA growth; and We have refinanced 100 properties totaling $16.3 · low double-digit FFO per share growth. (1) Amounts represent GGP’s pro rata share. FFO and EBITDA are non-GAAP financial measures. Reconciliations to the most comparable GAAP measure are included in the attached Form 10-K filed with the SEC on February 21, 2014, our supplemental information report for the three and 12 months ended December 31, 2013, and our earnings press release dated February 3, 2014. (2) This ratio is based on the net present value of debt as of December 31, 2013, of approximately $9.9 billion, calculated by applying 6 an 8% discount rate to maturing debt and expected EBITDA for 2014 of approximately $2.1 billion. 7 100.0 CONSUMER DEVELOPMENT led to relatively high retail sales. In 2013, consumers redirected spending to durable goods, such as CONFIDENCE At the end of 2013 we had $2.1 billion of automobiles and home improvement items, which developments: $285 million opened; $968 million resulted in moderate sales in other retail categories. 90.0 under construction; and $895 million in the pipeline. These developments are expected to Within the GGP portfolio, total sales in 2013 were $564 81.6 generate 9% to 11% unlevered first-year stabilized per square foot, 22% higher than the last peak in cash-on-cost returns. 2007, and 39% higher than the low in 2009. Looking 80.0 forward, we expect total retail sales to grow in step The expansion and renovation of Ala Moana with the economy and retail sales at high-quality Center in Honolulu, Hawaii, our flagship property, is retail properties to do slightly better. our largest development project. Bloomingdale’s 70.0 and Nordstrom will anchor 300,000 square feet of As the shopping center industry evolves, existing new inline retail for a total of 650,000 square feet of retailers are expanding their footprints and incubating new retail space. new concepts. An example is Pink from Victoria’s Secret. Between 2007 and 2012, Victoria’s Secret 60.0 Glendale Galleria in Glendale, California, is one of increased its selling square footage by 50% to an our largest completed projects to date. We took a average store size of more than 7,600 square feet. 57.1 low-performing wing of the mall with a vacant anchor It also incubated its Pink concept, transforming it store and transformed the entire center by, among into a free-standing store. Foot Locker has grown to other improvements, adding a 110,000 square foot incorporate House of Hoops. J Crew has Mercantile, 2008 2009 2010 2011 2012 2013 FEB 2014 flagship Bloomingdale’s that has a Gucci and a and Kate Spade unveiled Saturday. Louis Vuitton store-within-a-store. We completed the Sources: University of Michigan, Thomson Reuters. redevelopment on budget and on time, before the Fast fashion continues to grow. H&M, Uniqlo and 2013 holiday shopping season, and will meet our Zara are increasing their store count. Abercrombie is double-digit projected returns. evolving its Hollister brand into a fast fashion retailer. Lifestyle retailers Michael Kors and Kate Spade are becoming leaders in their category because they INDUSTRY PERSPECTIVES connect with their customer. Clothing designer PER-CAPITA INCOME MSAs Vince, a recent IPO, is on a growth trajectory. WITH Consumer confidence and low unemployment levels $50,000 OF GGP MARKETS GGP are critical to the overall health of the U.S.