2010 ANNUAL REPORT >> REPORT ANNUAL GENERAL GROWTH PROPERTIES GENERAL GROWTH 2010 ANNUAL REPORT >> 110 NORTH WACKER DRIVE, CHICAGO, ILLINOIS 60606 [ 312 ] 960-5000 | GGP.COM >>CORPORATE INFORMATION CORPORATE OFFICE REGISTRAR AND TRANSFER AGENT AND 110 North Wacker Drive, SHAREOWNER SERVICES DEPARTMENT Chicago, Illinois 60606 BNY Mellon (312) 960-5000 Shareowner Services 480 Washington Blvd. Jersey City, NJ 07310-2053 You may contact the Administrator at (888) 395-8037 or www.melloninvestor.com/isd TDD for Hearing Impaired: (800) 231-5469 Foreign Shareholders: (201) 680-6578 TDD for Foreign Shareholders: (800) 231-5469 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Deloitte & Touche LLP Chicago, Illinois Printed on Recycled Paper 20% Cover and body printed on paper containing a minimum of 20% post-consumer recovered fiber and manufactured with electricity in the form of renewable energy, 10-K printed on 10% recycled post-consumer fiber. Printed with soy ink. Designed by Conyers Design, Inc. | Printed by Edwards Graphic Arts, Inc. >> LETTER TO SHAREHOLDERS DEAR SHAREHOLDERS: I am honored to be the CEO of General Growth Properties. With hard work, perseverance and a little luck, we believe we can turn GGP into one of the great retail landlords in the U.S. It is time to roll up our sleeves to transform and rework our assets. GGP's portfolio of 180 malls includes some of the most outstanding in this country, such as Ala Moana, Fashion Show, Tysons Galleria, Natick Collection, Park Meadows and Water Tower Place. The mall portfolio consists of 169 million square feet; 71 million square feet is in-line space. The malls are well located in their respective markets. We own 25 of the top 100 malls in the country and Ala Moana Center 125 of the top 600; evidence of the quality of the assets. Honolulu, Hawaii In November 2010, GGP was recapitalized and had an “IPO-debut.” We raised $6.8 billion of capital from Brookfi eld Asset Management, Pershing Square Capital Management, The Blackstone Group, Fairholme Capital Management and Teachers Retirement System of Texas. In addition, $2.3 billion was raised in a public offering to replace part of the sponsors’ capital. The offering was 4x oversubscribed, and constituted the largest equity offering in U.S. REIT history. This is a testament to the inherent value of the company’s assets. As a result, we will steadfastly guard our balance sheet and the franchise to squarely focus on the task at hand: driving revenue and creating value for our shareholders. The year ended with Core Net Operating Income of $2.2 billion, effectively fl at year-over-year. The fourth quarter was stronger than last year, so the trend is positive. Occupancy at year-end was 92.9%, of which 86.0% is permanent. The rental spread on permanent occupancy was 2.9%. Each 100 basis points of permanent occupancy drives $25 million of increased operating income; each 100 basis points of margin improvement on our 14.2% of average occupancy costs adds $160 million. We are working to create a streamlined organization with best-in-class assets and a focus on capital management, operational effi ciency, and the most conducive environment for our tenants. THE ASSETS The last number of years have shown us that retail assets are not immune during turbulent economic times; however, they do admirably well during these down cycles. GGP owns a disproportionate number of high performing assets; the top 125 in our portfolio account for 87% of Core Net Operating Income. GGP's portfolio includes 234 properties comprised of 180 malls (including 11 Special Consideration Properties), 28 stand-alone strip shopping centers, and 26 stand-alone offi ce buildings, as of year-end. Water Tower Place We believe quality is better than quantity. The United States is over-retailed; Chicago, Illinois however, quality retail real estate is under-represented. This is where we stand to make our most gains. In addition, we have a foot-hold in Brazil through our investment in Aliansce and Shopping Leblon. Investing since 2004, GGP’s $126 million of equity was worth $490 million as of year-end, equating to a 35% IRR. THE RIGHT SIDE OF THE BALANCE SHEET As a result of the recapitalization, our debt was reduced by approximately 30%, from $27.8 billion to $20.6 billion, a start to the deleveraging. Our maturity ladder is fl atter and more manageable. While virtually all of our loans were due before 2013, prior to our reorganization, our maturity schedule is now balanced. >> LETTER TO SHAREHOLDERS PROPERTY LEVEL DEBT MATURITY LADDER PRE VERSUS POST-RESTRUCTURING $7,000 As of 3/31/2009 (Pre) $5,852 $6,000 As of 12/31/2010 (Post) $5,000 $4,308 $4,000 $2,991 $3,129 $3,040 $3,000 $2,531 $2,370 $2,000 $1,629 $1,728 $1,089 $1,000 $594 $566 $477 $436 $455 $507 $119 $111 $0 $99 $- 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020+ $ in millions A substantial amount of the debt is at the asset level. A unique feature in many of the mortgages, put in place during the reorganization, allows us to refi nance without payment of make-whole costs. This structure gives us enormous fi nancial fl exibility. We have embarked upon a signifi cant mortgage refi nancing plan. An environment of low interest rates allows us to achieve more favorable terms than we had imagined before. The capital markets have returned and favor the characteristics of our portfolio of assets – strategically located, irreplaceable and institutional quality with strong cash fl ows. Two years ago, with asset values at a low point, the few lenders in the market would only offer fi nancing at very conservative leverage levels with 8% interest rates for the best assets. Today, valuations have risen and we are seeing much better fi nancing levels with sub 6% interest rates, and a return of a healthy CMBS market, life companies, banks and bond market. Of our $18.4 billion of mortgages (at share), approximately $9.8 billion are open for pre-payment at par. We aim to refi nance approximately $5 billion in 2011, and extend our overall maturity schedule. Since November 9, 2010, we have refi nanced two properties for $315 million, are in the process of closing a $185 million loan, and are in the market with an additional six properties totaling approximately $1.5 billion. In addition, we increased our revolver from $300 million to $720 million, with an accordion feature permitting an increase up to $1 billion. Our focus is on execution. OPERATIONAL EXCELLENCE We will initially look inward to grow our income. We manage operations asset by asset. There is no one size fi ts all approach. As one of the largest landlords in the country we are in a position to understand the market and take notice of the subtle shifts. Our portfolio comprises 16,500 permanent tenants, 3,500 of them unique retailers. We executed 2,400 leases in 2010, totaling 7.3 million square feet and we will look to continue this pace – Lease, Lease, Lease! Development is an important component of internal growth. Now is the time to mine our existing portfolio. We will remain competitive and will continue to invest in our properties. This capital investment should yield double digit returns on equity as it is an incremental investment in a current retail center (add-on to a mall; re-doing an old anchor) and we estimate that over the next fi ve years, there is $1.5 - $2.0 billion of discretionary opportunities that may be available to us. We are focused on the details of our assets in order to make all of them the most signifi cant and secure in their markets. >> LETTER TO SHAREHOLDERS ACQUISITIONS AND DISPOSITIONS Since November 9, 2010, we have reduced our asset base by 4.5 million square feet, comprised of Arizona Center, nine strip/power centers and three Special Consideration Properties, totaling $298.6 million of gross proceeds and reducing our debt by $213.2 million. This activity has provided net proceeds of $224.6 million. Our goal is to have a portfolio comprised of approximately 150 assets, principally malls. Completing the disposition plan will enable us to generate proceeds of approximately $2.0 billion and pay down approximately $1.6 billion of debt with surplus proceeds used to repay corporate and asset level fi nancings as well as fund ongoing growth of the company. Our focus will be selective and discerning on strategic acquisitions with an eye toward enhancing the quality of our portfolio. TENANTS Retail real estate is a consumer-driven asset class. Our job is to create a shopping experience for our customers to leave their computers and venture out to our malls. The consumer is at the forefront in the economy and is at the forefront of our minds as we constantly seek to improve our malls. It is a symbiotic relationship. We want the most productive and exciting tenants in our malls and so do shoppers. Tenants create the mall, they are our clients, and we are doing everything to provide a collection of retailers and a physical aesthetic for them to excel. MARKET FUNDAMENTALS Markets are improving and retail sales are up. Comparable tenant sales in our mall portfolio were $446 per square foot as of year-end 2010, a 6.4% year-over-year gain. Having witnessed promising sales increases sequentially every month since hitting a low point in December 2009, we are encouraged to expect continued increases into 2011. STOCK PERFORMANCE We will manage the business for long term value creation.