Beneficial Interest in Debt and Interest Expense

The Operating Partnership's beneficial interest in the debt, capitalized interest, and interest expense of its consolidated subsidiaries and its Unconsolidated Joint Ventures is summarized in the following table. The Operating Partnership's beneficial interest in the consolidated subsidiaries excludes debt and interest related to the noncontrolling interests in Cherry Creek Shopping Center (50%), International Plaza (49.9%), The Pier Shops at Caesars (The Pier Shops) (see Notes 1 and 2 below), The Mall at Wellington Green (10%), and MacArthur Center (MacArthur) (5%).



	At 100%				At Beneficial Interest
	Consolidated Subsidiaries		Unconsolidated Joint Ventures		Consolidated Subsidiaries			Unconsolidated Joint Ventures
Debt as of:
September 30, 2011	$	2,524,956	$	1,141,851	$	2,192,103	⁽¹⁾	$	582,373
December 31, 2010	2,656,560		1,125,618		2,297,460		⁽¹⁾	575,103

Capitalized interest:
Nine Months Ended September 30, 2011	406				406
Nine Months Ended September 30, 2010	176				176

Interest expense:
Nine Months Ended September 30, 2011	106,903		45,164		98,494		⁽²⁾	23,406
Nine Months Ended September 30, 2010	114,246		47,875		98,377		⁽¹⁾	24,810


(1)	The Pier Shops is included at beneficial interest of 77.5%.


(2)	The Pier Shops is included at 100%. See “MD&A – Results of Operations – The Pier Shops and Regency Square Reconciliations of Net Operating Income to Net Loss,” regarding a change in the presentation of beneficial interest in The Pier Shops’ operations in 2011.

Debt Covenants and Guarantees

Certain loan agreements contain various restrictive covenants, including a minimum net worth requirement, a maximum payout ratio on distributions, a minimum debt yield ratio, a maximum leverage ratio, minimum interest coverage ratios, and a minimum fixed charges coverage ratio, the latter being the most restrictive. This covenant requires that the Company maintain a minimum fixed charges coverage ratio of more than 1.5 over a trailing 12-month period. As of September 30, 2011, the Company’s trailing 12-month fixed charges coverage ratio was 2.2. Other than The Pier Shops’ and Regency Square loans, which are in default, the Company is in compliance with all of its covenants and loan obligations as of September 30, 2011. The default on these loans did not trigger any cross defaults on our other indebtedness. The maximum payout ratio on distributions covenant limits the payment of distributions generally to 95% of funds from operations, as defined in the loan agreements, except as required to maintain our tax status, pay preferred distributions, and for distributions related to the sale of certain assets.

Payments of principal and interest on the loans in the following table are guaranteed by the Operating Partnership as of September 30, 2011.



Center	Loan Balance as of 9/30/11		TRG's Beneficial Interest in Loan Balance as of 9/30/11		Amount of Loan Balance Guaranteed by TRG as of 9/30/11		% of Loan Balance Guaranteed by TRG		% of Interest Guaranteed by TRG
	(in millions)
Dolphin Mall	—		—		—		100	%	100	%
Fairlane Town Center	$	20.0	$	20.0	$	20.0	100		100
Twelve Oaks Mall	—		—		—		100		100

The Company is required to escrow cash balances for specific uses stipulated by certain of its lenders. As of September 30, 2011 and December 31, 2010, the Company’s cash balances restricted for these uses were $8.3 million and $7.6 million, respectively. Such amounts are included within Deferred Charges and Other Assets in the Company’s Consolidated Balance Sheet.

2011 Financings

In July 2011, a $275 million non-recourse refinancing was completed on Fair Oaks, a 50% owned unconsolidated joint venture, which bears interest at one-month LIBOR plus 1.70% and matures in July 2018. The rate on the loan has been swapped to an all-in fixed rate of 4.27% through April 2018. The loan is interest only until August 2014, and then the loan payments are based on amortizing principal over 25 years. The existing $250 million floating rate loan was paid off and the Company's $11.1 million beneficial share of excess proceeds was used to pay down its lines of credit. The rate on the loan had been fixed at 4.22% due to an interest rate swap that matured in April 2011. The loan then reverted to a floating rate at LIBOR plus 1.40%.

In July 2011, the Company refinanced its primary line of credit. The new line of credit increased the borrowing capacity from $550 million to $650 million, and matures in January 2015 with a 1-year extension option. The borrowing rate on the new facility is LIBOR plus 1.75%, up from LIBOR plus 0.7% on the previous facility.

In March 2011, the maturity date on the Company’s secondary line of credit was extended through April 2012. In addition, the maximum amount available under this facility was increased to $65 million from the prior $40 million maximum for the $25 million letter of credit required by the lessor of the City Creek Center project. The availability under the line is anticipated to revert to $40 million when the obligation under the letter of credit is extinguished.

In January 2011, the current loan on International Plaza was extended to a maturity of July 2012. The principal balance on the loan was required to be paid down by $52.6 million. The Company funded its $26.4 million beneficial share of the paydown using its revolving line of credit. The principal on the loan is now $272.4 million at 100%, and $136.5 million at the Company’s beneficial share. The rate on the loan had been fixed at 5.01% due to an interest rate swap that also matured in January 2011. The loan has now reverted to a floating rate at LIBOR plus 1.15%. The extended loan is prepayable at any time and has an additional one-year extension option.

Regency Square and The Pier Shops Loan Defaults

In June 2011, the $72.2 million non-recourse loan encumbering Regency Square went into default due to insufficient cash flow to support the debt service on the loan. The lender has begun taking steps to acquire ownership of the center. Under the terms of the loan agreement, interest accrues at the original stated rate of 6.75% plus a 4% default rate. The book value of the investment in Regency Square as of September 30, 2011 was approximately $28 million.

During the nine months ended September 30, 2011, the $135 million non-recourse loan encumbering The Pier Shops was also in default. Under the terms of the loan agreement, interest accrued at the original stated rate of 6.01% plus a 4% default rate. In October 2011, a foreclosure sale was held and the lender was the highest bidder. See Note 12 for additional information on the expected disposition of The Pier Shops. The book value of the investment in The Pier Shops as of September 30, 2011 was approximately $37 million. See Note 9 for more information on related litigation.