10-Q

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 June 30, 2005
	or
o	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the transition period from                                           to

Commission file number 1-11656

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

(Address of principal executive offices, including Zip Code)

(312) 960-5000

(Registrant’s telephone number, including area code)

N / A

(Former name, former address and former fiscal year, if changed since last report)

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.

YES þ                NO o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

YES þ                NO o

The number of shares of Common Stock, $.01 par value, outstanding on August 5, 2005 was 238,319,384.

GENERAL GROWTH PROPERTIES, INC.

INDEX

	PAGE
	NUMBER
Part I FINANCIAL INFORMATION
Item 1: Financial Statements (Unaudited)
Consolidated Balance Sheets		3
Consolidated Statements of Operations and Comprehensive Income		4
Consolidated Statements of Cash Flows		5
Notes to Consolidated Financial Statements		6
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations		28
Liquidity and Capital Resources		35
Item 3: Quantitative and Qualitative Disclosures about Market Risk		39
Item 4: Controls and Procedures		39
Part II OTHER INFORMATION
Item 1: Legal Proceedings		40
Item 2: Unregistered Sales of Securities and Use of Proceeds		40
Item 3: Defaults Upon Senior Securities		40
Item 4: Submission of Matters to a Vote of Security Holders		40
Item 5: Other Information		41
Item 6: Exhibits		41
SIGNATURE		43
EXHIBIT INDEX		44
1998 Incentive Stock Plan, as Amended
Certification of CEO Pursuant to Section 302
Certification of CFO Pursuant to Section 302
Certification of CEO Pursuant to Section 906
Certification of CFO Pursuant to Section 906
Risk Factors

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GENERAL GROWTH PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS

	June 30, 2005			December 31, 2004
	(Dollars in thousands)
	(Unaudited)
Assets
Investment in real estate:
Land	$	2,863,162		$	2,859,552
Buildings and equipment		18,336,543			18,251,258
Less accumulated depreciation		(1,784,118	)		(1,453,488	)
Developments in progress		635,739			559,969
Net property and equipment		20,051,326			20,217,291
Investment in and loans to/from Unconsolidated Real Estate Affiliates		1,852,770			1,945,541
Investment land and land held for development and sale		1,641,352			1,638,013
Net investment in real estate		23,545,448			23,800,845
Cash and cash equivalents		50,549			39,581
Accounts and notes receivable, net		252,670			242,425
Deferred expenses, net		154,909			153,231
Prepaid expenses and other assets		1,355,220			1,482,543
Total assets	$	25,358,796		$	25,718,625
Liabilities and Stockholders’ Equity
Mortgage notes and other property debt payable	$	20,458,401		$	20,310,947
Deferred tax liabilities		1,284,175			1,414,565
Accounts payable and accrued expenses		880,178			895,520
Total liabilities		22,622,754			22,621,032
Minority interests:
Preferred		215,071			403,161
Common		476,727			551,282
Total minority interests		691,798			954,443
Commitments and contingencies		—			—
Preferred stock: $100 par value; 5,000,000 shares authorized; none issued and outstanding		—			—
Stockholders’ equity:
Common stock: $.01 par value; 875,000,000 shares authorized; 238,063,623 and 234,724,082 shares issued and outstanding as of June 30, 2005 and December 31, 2004, respectively		2,381			2,347
Additional paid-in capital		2,422,065			2,378,237
Retained earnings (accumulated deficit)		(381,902	)		(227,511	)
Notes receivable-common stock purchase		(1,135	)		(5,178	)
Unearned compensation-restricted stock		(1,747	)		(1,060	)
Accumulated other comprehensive income (loss)		4,582			(3,685	)
Total stockholders’ equity		2,044,244			2,143,150
Total liabilities and stockholders’ equity	$	25,358,796		$	25,718,625

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

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GENERAL GROWTH PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2005			2004			2005			2004
	(In thousands, except for per share amounts)
Revenues:
Minimum rents	$	409,398		$	231,724		$	819,882		$	453,419
Tenant recoveries		183,718			105,469			365,725			207,690
Overage rents		9,700			4,703			23,286			13,054
Land sales		114,345			—			175,751			—
Management and other fees		23,252			20,163			42,815			38,864
Other		26,450			12,316			48,937			21,172
Total revenues		766,863			374,375			1,476,396			734,199
Expenses:
Real estate taxes		52,781			28,848			106,285			56,970
Repairs and maintenance		50,206			25,320			104,023			49,956
Marketing		12,530			10,515			24,898			20,955
Other property operating costs		94,341			48,777			184,362			89,998
Land sales operations		94,348			—			148,195			—
Provision for doubtful accounts		4,258			2,565			8,512			5,350
Property management and other costs		43,484			24,312			78,121			49,324
General and administrative		3,635			2,812			6,446			5,002
Depreciation and amortization		173,075			85,757			336,384			158,660
Total expenses		528,658			228,906			997,226			436,215
Operating income		238,205			145,469			479,170			297,984
Interest income		2,489			366			4,706			783
Interest expense		(244,842	)		(90,460	)		(489,870	)		(177,547	)
Provision for income taxes		(14,061	)		(382	)		(12,754	)		(389	)
Income allocated to minority interests		(8,786	)		(22,900	)		(21,642	)		(48,338	)
Equity in income of unconsolidated affiliates		29,647			18,154			56,107			36,084
Income from continuing operations		2,652			50,247			15,717			108,577
Income from discontinued operations, net of minority interests		—			901			—			1,694
Net income	$	2,652		$	51,148		$	15,717		$	110,271
Basic earnings per share:
Continuing operations	$	0.01		$	0.23		$	0.07		$	0.50
Discontinued operations		—			0.01			—			0.01
Total basic earnings per share	$	0.01		$	0.24		$	0.07		$	0.51
Diluted earnings per share:
Continuing operations	$	0.01		$	0.22		$	0.07		$	0.49
Discontinued operations		—			0.01			—			0.01
Total diluted earnings per share	$	0.01		$	0.23		$	0.07		$	0.50
Distributions declared per share	$	0.36		$	0.30		$	0.72		$	0.60
Comprehensive income, net:
Net income	$	2,652		$	51,148		$	15,717		$	110,271
Other comprehensive income, net of minority interest:
Net unrealized gains (losses) on derivative financial instruments		(1,355	)		5,993			4,772			6,319
Minimum pension liability adjustment		(75	)		(99	)		(182	)		(182	)
Foreign currency translation		3,481			—			3,437			—
Net unrealized gains (losses) on available-for-sale securities		(50	)		—			240			—
Comprehensive income, net	$	4,653		$	57,042		$	23,984		$	116,408

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

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GENERAL GROWTH PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Six Months Ended
	June 30,
	2005			2004
	(In thousands)
Cash flows from operating activities:
Net Income	$	15,717		$	110,271
Adjustments to reconcile net income to net cash provided by operating activities:
Minority interests, including discontinued operations		21,642			48,761
Equity in income of unconsolidated affiliates		(56,107	)		(36,084	)
Provision for doubtful accounts, including discontinued operations		8,512			5,364
Distributions received from unconsolidated affiliates		56,283			32,940
Depreciation, including discontinued operations		326,501			150,260
Amortization, including discontinued operations		14,125			14,577
Participation expense pursuant to Contingent Stock Agreement		51,687			—
Land development and acquisition expenditures		(59,610	)		—
Cost of land sales		84,287			—
Debt assumed by purchasers of land		(4,133	)		—
Losses on extinguishment of debt		4,613			6,187
Deferred income taxes		10,844			—
Net changes:
Accounts and notes receivable		(13,820	)		(6,954	)
Prepaid expenses and other assets		3,516			415
Deferred expenses		(2,215	)		(16,219	)
Accounts payable and accrued expenses		(82,196	)		33,903
Net cash provided by operating activities		379,646			343,421
Cash flows from investing activities:
Acquisition/development of real estate and improvements and additions to properties		(205,271	)		(1,316,349	)
Increase in investments in unconsolidated affiliates		(40,950	)		(143,052	)
Increase in restricted cash		(18,317	)		(2,223	)
Distributions received from unconsolidated affiliates in excess of income		72,882			20,164
Proceeds from repayment of notes receivable for common stock purchases		4,505			563
Loans to/from unconsolidated affiliates, net		89,000			(8,884	)
Marketable securities, net		5,699			—
Net cash used in investing activities		(92,452	)		(1,449,781	)
Cash flows from financing activities:
Cash distributions paid to common stockholders		(170,109	)		(130,550	)
Cash distributions paid to holders of Common Units		(39,467	)		(33,575	)
Cash distributions paid to holders of perpetual and convertible preferred units		(18,579	)		(20,012	)
Cash distributions to Minority Interest-Common		(6,547	)		—
Proceeds from issuance of common stock, including from common stock plans		36,650			13,716
Redemption of preferred minority interests:
PDC Series A Perpetual Preferred Units		—			(12,750	)
PDC Series C Perpetual Preferred Units		(8,000	)		—
Redeemable Preferred Units		(175,000	)		—
Other preferred stock of consolidated subsidiaries		—			(173	)
Proceeds from issuance of mortgage notes and other property debt payable		2,917,537			2,396,399
Principal payments on mortgage notes and other property debt payable		(2,808,218	)		(1,095,900	)
Deferred financing costs		(4,493	)		(6,207	)
Net cash provided by (used in) financing activities		(276,226	)		1,110,948
Net change in cash and cash equivalents		10,968			4,588
Cash and cash equivalents at beginning of period		39,581			10,677
Cash and cash equivalents at end of period	$	50,549		$	15,265
Supplemental disclosure of cash flow information:
Interest paid	$	501,973		$	174,634
Interest capitalized		28,941			3,602
Non-cash investing and financing activities (Note 2):
Common stock issued in exchange for Operating Partnership Units	$	18,661		$	1,314
Common stock issued in exchange for convertible preferred units		5,210			8,956
Debt assumed in conjunction with acquisition of property		—			134,902
Common stock issued pursuant to Contingent Stock Agreement		18,098			—
Operating Partnership Units issued as consideration for purchase of real estate		—			25,132

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

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GENERAL GROWTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 1 ORGANIZATION

Readers of this Quarterly Report on Form 10-Q should refer to the Company’s (as defined below) audited financial statements for the year ended December 31, 2004 which are included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004 (Commission File No. 1-11656), as certain footnote disclosures which would substantially duplicate those contained in the 2004 annual audited financial statements have been omitted from this report. Capitalized terms used, but not defined, in this Quarterly Report have the same meanings as in the Company’s 2004 Annual Report on Form 10-K (the “10-K”).

General

General Growth Properties, Inc. (“General Growth”), a Delaware corporation, is a self-administered and self-managed real estate investment trust, referred to as a “REIT.” General Growth was organized in 1986 and through its subsidiaries and affiliates owns, operates, manages, leases, acquires, develops, expands and finances operating properties located primarily throughout the United States and develops and sells land for residential, commercial and other uses primarily in master-planned communities. The operating properties consist of retail centers, office and industrial buildings and mixed-use and other properties. Land development and sales operations are predominantly related to large-scale, long-term community development projects in and around Columbia, Maryland; Summerlin, Nevada; and Houston, Texas. In these notes, the terms “we”, “us” and “our” refer to General Growth and its subsidiaries (the “Company”).

Substantially all of our business is conducted through GGP Limited Partnership (the “Operating Partnership” or “GGPLP”). As of June 30, 2005, General Growth, as sole general partner, owned approximately 81.6% of the Operating Partnership. Approximately 16.0% of the Operating Partnership is held by limited partners that indirectly include family members of the original stockholders of the Company and is represented by common units of limited partnership interest in the Operating Partnership (the “Common Units”). The remaining approximately 2.4% of the Operating Partnership is held by limited partners that include subsequent contributors of properties to the Operating Partnership. In addition, the Operating Partnership has preferred units of limited partnership interest (the “Preferred Units”) outstanding. Under certain circumstances, the Preferred Units are convertible into Common Units which are redeemable for shares of our common stock on a one-for-one basis.

In addition to holding ownership interests in various joint ventures, the Operating Partnership generally conducts its operations through the following subsidiaries:

• GGPLP L.L.C., a Delaware limited liability company (the “LLC”), has ownership interests in the majority of our properties (other than those acquired in The Rouse Company merger (the “TRC Merger,” Note 2)).

• The Rouse Company LP (“TRCLP”), successor to The Rouse Company, which includes both a REIT and taxable REIT subsidiaries (“TRSs”), has ownership interests in Consolidated Properties and Unconsolidated Properties (as defined below).

• General Growth Management, Inc. (“GGMI”), a TRS, manages, leases, and performs various other services for some of our Unconsolidated Real Estate Affiliates (as defined below) and approximately 30 properties owned by unaffiliated third parties.

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 non-controlling interest as “Unconsolidated Real Estate Affiliates” and the properties owned by such joint ventures as the

6 of 44

GENERAL GROWTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

“Unconsolidated Properties.” Our “Company Portfolio” includes both the Unconsolidated Properties and our Consolidated Properties.

Basis of Presentation

The accompanying consolidated financial statements include the accounts of General Growth, our subsidiaries and joint ventures in which we have a controlling interest. We also consolidate the accounts of certain variable interest entities that were acquired in the TRC Merger (Note 2) and for which we are the primary beneficiary. Income allocated to minority interests in these joint ventures includes the share of such properties’ operations (generally computed as the respective joint venture partner ownership percentage) applicable to such non-controlling venturers. The equity of these non-controlling venturers has been included in minority interests-common.

Acquisitions (Note 2) are accounted for utilizing the purchase method of accounting and accordingly, the results of operations are included in our results of operations from the respective dates of acquisition. 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 and results of operations and cash flows for the interim periods have been included. The results for the interim periods ended June 30, 2005 are not necessarily indicative of the results to be obtained for the full fiscal year.

Minority Interests

Common

Changes in outstanding Operating Partnership Common Units for the six months ended June 30, 2005 were as follows:

December 31, 2004	55,532,263
Conversion of Preferred Units into Common Units	274,275
Redemptions for General Growth common stock	(2,126,097	)
June 30, 2005	53,680,441

Preferred

Components of minority interests–preferred at June 30, 2005 and December 31, 2004 were as follows:

					Number of		Per Unit				Carrying Amount
	Coupon			Issuing	units as of		Liquidation		Redeemable		June 30,		December 31,
Security Type	Rate			Entity	June 30, 2005		Preference		by Issuer		2005		2004
											(In thousands)
Perpetual Preferred Units
Redeemable Preferred Units (“RPUs”)		8.95	%	LLC		240,000	$	250	April 2007		$	60,000	$	235,000	(1)
Cumulative Preferred Units (“CPUs”)		8.25	%	LLC		20,000		250		N/A		5,000		5,000
Price Development Company (“PDC”) Series C		8.75	%	PDC		—		25		N/A		—		8,000
												65,000		248,000

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GENERAL GROWTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

												Carrying Amount
							Per Unit					June 30,		December 31,
	Coupon			Issuing	Number		Liquidation		Redeemable			2005		2004
Security Type	Rate			Entity	of Units		Preference		by Issuer
Convertible Preferred Units
Series B-JP Realty		8.50	%	GGPLP		1,382,842		50		N/A			69,142		70,975
Series C-Glendale Galleria		7.00	%	GGPLP		575,959		50		N/A			28,799		32,176
Series D-Foothills Mall		6.50	%	GGPLP		532,750		50		N/A			26,637		26,637
Series E-Four Seasons Town Centre		7.00	%	GGPLP		502,658		50		N/A			25,132		25,132
													149,710		154,920
Other preferred stock of consolidated subsidiaries		N/A		various		361		1,000		(2	)		361		241
Total Minority Interest-Preferred												$	215,071	$	403,161

(1)	Includes $175 million which was called for redemption in March 2005 as permitted under the terms of the applicable RPUs.
(2)	Redeemable on demand, under certain circumstances.

Earnings Per Share (“EPS”)

Information related to our EPS calculations were as follows:

	Three Months Ended June 30,
	2005				2004
	Basic		Diluted		Basic		Diluted
	(In thousands)
Numerators:
Income from continuing operations	$	2,652	$	2,652	$	50,247	$	50,247
Discontinued operations, net of minority interests		—		—		901		901
Net income	$	2,652	$	2,652	$	51,148	$	51,148
Denominators:
Weighted average number of common shares outstanding — basic		237,854		237,854		218,075		218,075
Effect of dilutive securities — options		—		1,068		—		807
Weighted average number of common shares outstanding — diluted		237,854		238,922		218,075		218,882

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GENERAL GROWTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

	Six Months Ended June 30,
	2005				2004
	Basic		Diluted		Basic		Diluted
	(In thousands)
Numerators:
Income from continuing operations	$	15,717	$	15,717	$	108,577	$	108,577
Discontinued operations, net of minority interests		—		—		1,694		1,694
Net income	$	15,717	$	15,717	$	110,271	$	110,271
Denominators:
Weighted average number of common shares outstanding — basic		236,838		236,838		217,814		217,814
Effect of dilutive securities — options		—		865		—		836
Weighted average number of common shares outstanding — diluted		236,838		237,703		217,814		218,650

Diluted EPS excludes anti-dilutive options where the exercise price was higher than the average market price of our common stock and options for which conditions for issuance were not achieved. Such options totaled 1,903,108 for the three months ended June 30, 2005, 1,813,000 for the three months ended June 30, 2004, 1,940,125 for the six months ended June 30, 2005 and 1,405,000 for the six months ended June 30, 2004. Outstanding Common Units have also been excluded from the diluted earnings per share calculation because there would be no effect on EPS as the minority interests’ share of income would also be added back to net income.

Notes Receivable — Officers

Notes receivable — officers were as follows:

	June 30,		December 31,
(In thousands)	2005		2004
Income tax withholdings reported in Prepaid expenses and other assets	$	161	$	623
Reported as a reduction to Stockholders’ equity		1,135		5,178
	$	1,296	$	5,801

During February 2005, one of the officers voluntarily repaid his note in full, which had an outstanding balance of $4.3 million at December 31, 2004.

Revenue Recognition and Related Matters

As of June 30, 2005, straight-line rents receivable, which represent the current net cumulative rents recognized prior to when billed and collectible as provided by the terms of the leases, of approximately $115.9 million are included in accounts and notes receivable, net in the accompanying consolidated balance sheet (Note 8).

Lease termination income was $6.7 million for the three months ended June 30, 2005, $2.3 million for the three months ended June 30, 2004, $9.3 million for the six months ended June 30, 2005, and $5.3 million for the six months ended June 30, 2004.

Management and other fees primarily represent management and leasing fees, financing fees and fees for other ancillary services which we perform for the benefit of the Unconsolidated Real Estate Affiliates and properties owned by third parties and are recognized as revenues when earned. We recognized fees for services performed for the Unconsolidated Properties of approximately $20.4 million for the three months

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GENERAL GROWTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

ended June 30, 2005, $16.0 million for the three months ended June 30, 2004, $37.8 million for the six months ended June 30, 2005 and $30.3 million for the six months ended June 30, 2004.

Stock Plans

During the second quarter of 2002, we elected to prospectively adopt the fair value based employee stock-based compensation expense recognition provisions of Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”). We had previously applied the intrinsic value based expense recognition provisions set forth in APB Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”). The transition rules for adoption of SFAS 123 provide that prior grants of options, whether from our 1993 Stock Incentive Plan (now expired) or the 1998 Incentive Plan, are accounted for under APB 25. Had compensation costs for such prior grants of options been recorded under SFAS 123, our net income and earnings per share would have been nominally reduced but there would have been no effect on reported basic or diluted earnings per share.

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 period. For example, significant estimates and assumptions have been made with respect to useful lives of assets, capitalization of development and leasing costs, recoverable amounts of receivables and deferred taxes and initial valuations and related amortization periods of deferred costs and intangibles, particularly with respect to property acquisitions. Actual results could differ from those estimates.

Reclassifications

Certain amounts in the 2004 consolidated financial statements, including discontinued operations (Note 7), have been reclassified to conform to the current year presentation.

NOTE 2 ACQUISITIONS AND INTANGIBLES

The Rouse Company

We acquired The Rouse Company (“TRC”), a real estate development and management company, on November 12, 2004 (the “TRC Merger”) for a purchase price, including debt and other liabilities assumed, of approximately $14.2 billion. Immediately following the TRC Merger, TRC was, through a series of transactions, converted to a limited partnership (“TRCLP”) wholly-owned by the Operating Partnership and its subsidiaries. The results of TRCLP’s operations have been included in our consolidated financial statements since that date.

The following table summarizes the estimated fair values of the assets acquired at the date of acquisition, including adjustments made during the six months ended June 30, 2005. These fair values were based, in part, on preliminary third-party market valuations. These fair values were based on currently available information and assumptions and estimates that we believe are reasonable at this time. We will continue to review and expect to adjust these fair values as additional information becomes available for a period of one year following the acquisition.

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GENERAL GROWTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

	November 12,		Non-cash				June 30,
(In thousands)	2004		Adjustments			2005
Land	$	1,314,711	$	—		$	1,314,711
Buildings and equipment		8,206,370		(35,658	)		8,170,712
Developments in progress		383,996		(22,268	)		361,728
Investment in and loans to Unconsolidated Real Estate Affiliates		1,236,299		32,822			1,269,121
Investment land and land held for development and sale		1,645,700		33,128			1,678,828
Cash and cash equivalents		29,077		—			29,077
Accounts and notes receivable		84,424		1,811			86,235
Prepaid expenses and other assets:
Below-market ground leases		382,328		(895	)		381,433
Above-market tenant leases		141,048		—			141,048
Deferred tax assets		145,243		(142,675	)		2,568
Goodwill		356,796		57,199			413,995
Other		401,527		(8,995	)		392,532
Total purchase price	$	14,327,519	$	(85,531	)	$	14,241,988

During the six months ended June 30, 2005, liabilities assumed were also reduced by $90 million as additional information became available.

Other Acquisitions

Also in 2004, we made the following acquisitions which have been reflected in our consolidated financial statements since the dates of the respective acquisitions:

	Acquisition
	Date
50% ownership interest in Burlington Town Center	January 7
Redlands Mall	January 16
The remaining 50% ownership interest in Town East Mall	March 1
Four Seasons Town Centre	March 5
Ownership interest in GSG de Cost Rica SRL	April 30
50% ownership interest in Hoover Mall Holding, L.L.C.	May 11
Mall of Louisiana	May 12
Grand Canal Shoppes	May 17
50% ownership interest in GGP/NIG Brazil	July 30
Stonestown Galleria	August 13

In addition to the acquisitions discussed above, we have entered into a separate agreement (the “Phase II Agreement”), to acquire the multi-level retail space that is planned to be part of The Palazzo in Las Vegas, Nevada that will be connected to the existing Venetian and the Sands Expo and Convention Center facilities (the “Phase II Acquisition”) and the Grand Canal Shoppes described above. The Palazzo is currently under construction and is expected to be completed in 2007. If completed as specified under the terms of the Phase II Agreement, we will purchase, payable upon grand opening, the Phase II Acquisition retail space at a price computed on a 6% capitalization rate on the projected net operating income of the Phase II retail space, as defined by the Phase II Agreement (“Phase II NOI”), up to $38 million and on a capitalization rate of 8% on Phase II NOI in excess of $38 million, all subject to a minimum purchase price of $250 million. Based on current construction plans and estimated rents, we believe the actual purchase price will be more than double the minimum purchase price. The Phase II Agreement is subject to the satisfaction of separate and customary closing conditions.

Accounting for Acquisitions and Intangibles

Acquisitions of properties are accounted for utilizing the purchase method and accordingly, the results of operations are included in our results of operations subsequent to the respective dates of acquisition. The

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GENERAL GROWTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

purchase prices for all property acquisitions are subject to certain prorations and adjustments. Estimates of future cash flows and other valuation techniques are used to allocate the purchase price of acquired property between land, buildings and improvements, equipment and identifiable intangible assets and liabilities such as amounts related to in-place at-market leases, acquired above and below-market leases and tenant relationships. Initial valuations are subject to change until such information is finalized no later than 12 months from the applicable acquisition dates.

The following table summarizes our intangible assets and liabilities:

(In millions)	Gross Asset			Accumulated			Net Carrying
	(Liability)			Amortization			Amount
June 30, 2005
In-place leases	$	601			$95		$	506
Below-market ground leases		381			5			376
Below-market tenant leases		(306	)		(83	)		(223	)
Above-market tenant leases		142			20			122
Real estate tax stabilization agreement		94			3			91
December 31, 2004
In-place leases		595			29			566
Below-market ground leases		381			1			380
Below-market tenant leases		(304	)		(52	)		(252	)
Above-market tenant leases		142			4			138
Real estate tax stabilization agreement		94			1			93

Amortization of these intangible assets and liabilities, and similar assets and liabilities from our Unconsolidated Real Estate Affiliates, increased (decreased) net income by approximately $(40.0) million for the three months ended June 30, 2005, $5.7 million for the three months ended June 30, 2004 $(65.5) million for the six months ended June 30, 2005 and $10.7 million for the six months ended June 30, 2004.

Future amortization, including our share of such items from Unconsolidated Real Estate Affiliates, is estimated to decrease net income by approximately $110 million in 2005, 2006 and 2007, $100 million in 2008 and $70 million in 2009.

NOTE 3 INVESTMENTS IN AND LOANS TO/FROM UNCONSOLIDATED REAL ESTATE AFFILIATES

The Unconsolidated Real Estate Affiliates constitute our investment in real estate joint ventures that own and/or develop shopping centers, residential and commercial land, and other retail and investment property. 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. Some of the joint ventures have elected to be taxed as REITs. Since we have joint interest and control of the Unconsolidated Properties with our venture partners, we account for these joint ventures using the equity method.

In certain circumstances, we are obligated to fund debt in excess of our pro rata share of the debt of our Unconsolidated Real Estate Affiliates. Such Retained Debt totaled $144.0 million as of June 30, 2005 and $148.7 million as of December 31, 2004.

The significant accounting policies used by the Unconsolidated Real Estate Affiliates are the same as those of General Growth.

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GENERAL GROWTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Condensed Combined Financial Information of Unconsolidated Real Estate Affiliates

The following is condensed combined financial information for our Unconsolidated Real Estate Affiliates as of June 30, 2005 and December 31, 2004 and for the periods ended June 30, 2005 and 2004.

				December 31,
	June 30, 2005			2004
(In thousands)
Condensed Combined Balance Sheets — Unconsolidated Real Estate Affiliates
Assets:
Land	$	867,484		$	852,137
Buildings and equipment		7,318,460			7,398,555
Less accumulated depreciation		(1,175,830	)		(982,616	)
Developments in progress		304,413			220,486
Net property and equipment		7,314,527			7,488,562
Investment in unconsolidated joint ventures		70,006			56,362
Investment land and land held for sale and development		266,874			257,555
Net investment in real estate		7,651,407			7,802,479
Cash and cash equivalents		162,152			134,399
Accounts and notes receivable, net		129,111			119,446
Deferred expenses, net		160,516			175,446
Prepaid expenses and other assets		184,368			261,555
Total assets	$	8,287,554		$	8,493,325
Liabilities and Owners’ Equity:
Mortgage notes and other property debt payable	$	5,878,109		$	5,601,137
Accounts payable and accrued expenses		394,179			417,300
Minority interest		117			117
Owners’ equity		2,015,149			2,474,771
Total liabilities and owners’ equity	$	8,287,554		$	8,493,325
Investment In and Loans To/From Unconsolidated Real Estate Affiliates
Owners’ equity	$	2,015,149		$	2,474,771
Less joint venture partners’ equity		(1,046,329	)		(1,258,133	)
Capital or basis differences and loans		883,950			728,903
Investment in and loans to/from Unconsolidated Real Estate Affiliates	$	1,852,770		$	1,945,541

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GENERAL GROWTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2005			2004			2005			2004
(In thousands)
Condensed Combined Statements of Operations — Unconsolidated Real Estate Affiliates
Revenues:
Minimum rents	$	189,784		$	128,154		$	385,617		$	253,537
Tenant recoveries		89,393			59,705			176,288			121,329
Overage rents		2,253			1,115			5,756			3,328
Land sales		54,581			—			70,900			—
Other		38,163			3,979			68,127			6,952
Total revenues		374,174			192,953			706,688			385,146
Expenses:
Real estate taxes		27,795			17,070			55,338			35,027
Repairs and maintenance		17,199			14,008			39,998			28,448
Marketing		7,282			6,400			14,535			12,787
Other property operating costs		68,978			27,594			129,131			53,556
Land sales operations		28,552			—			35,756			—
Provision for doubtful accounts		1,144			1,054			3,351			2,436
Property management and other costs		11,821			11,068			23,464			22,102
General and administrative		3,788			766			4,269			1,051
Depreciation and amortization		67,674			39,095			126,692			77,622
Total expenses		234,233			117,055			432,534			233,029
Operating income		139,941			75,898			274,154			152,117
Interest income		1,868			675			3,404			1,522
Interest expense		(71,957	)		(40,381	)		(141,196	)		(81,361	)
Equity in income of unconsolidated joint ventures		1,184			1,125			2,303			2,264
Net income	$	71,036		$	37,317		$	138,665		$	74,542
Equity In Income of Unconsolidated Real Estate Affiliates
Total income of Unconsolidated Real Estate Affiliates	$	71,036		$	37,317		$	138,665		$	74,542
Joint venture partners’ share of income of Unconsolidated Real Estate Affiliates		(36,485	)		(19,111	)		(71,276	)		(38,292	)
Amortization of capital or basis differences		(4,892	)		(52	)		(11,270	)		(149	)
Elimination of Unconsolidated Real Estate Affiliates loan interest		(12	)		—			(12	)		(17	)
Equity in income of Unconsolidated Real Estate Affiliates	$	29,647		$	18,154		$	56,107		$	36,084

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GENERAL GROWTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The following is summarized financial information for certain individually significant Unconsolidated Real Estate Affiliates as of June 30, 2005 and December 31, 2004 and for the periods ended June 30, 2005 and 2004.

	GGP/Homart						GGP/Homart II
	June 30,			December 31,			June 30,			December 31,
	2005			2004			2005			2004
(In thousands)
Assets:
Land	$	146,777		$	146,777		$	190,707		$	190,707
Buildings and equipment		1,776,774			1,765,800			1,993,609			1,957,969
Less accumulated depreciation		(421,006	)		(389,682	)		(234,484	)		(205,637	)
Developments in progress		21,598			8,586			85,744			63,970
Investment in unconsolidated joint ventures		9,597			10,898			—			—
Net investment in real estate		1,533,740			1,542,379			2,035,576			2,007,009
Cash and cash equivalents		11,360			20,319			47,139			23,149
Accounts receivable, net		40,967			39,254			29,699			32,265
Deferred expenses, net		48,104			48,969			58,438			59,102
Prepaid expenses and other assets		16,822			56,482			29,972			36,236
Total assets	$	1,650,993		$	1,707,403		$	2,200,824		$	2,157,761
Liabilities and Owners’ Equity:
Mortgage notes and other property debt payable	$	1,517,778		$	1,469,938		$	1,501,927		$	1,331,301
Accounts payable and accrued expenses		54,699			63,560			69,328			81,574
Minority interest		—			—			117			117
Owners’ equity		78,516			173,905			629,452			744,769
Total liabilities and owners’ equity	$	1,650,993		$	1,707,403		$	2,200,824		$	2,157,761

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GENERAL GROWTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

	GGP/Homart						GGP/Homart II
Three months ended June 30,	2005			2004			2005			2004
(In thousands)
Revenues:
Minimum rents	$	53,059		$	51,383		$	47,294		$	44,819
Tenant recoveries		24,331			23,007			22,488			21,140
Overage rents		572			394			559			631
Other		2,091			1,951			2,581			1,171
Total revenues		80,053			76,735			72,922			67,761
Expenses:
Real estate taxes		7,416			6,730			6,436			6,153
Repairs and maintenance		6,074			6,328			4,514			4,495
Marketing		2,474			2,321			2,490			2,493
Other property operating costs		9,735			10,412			6,204			9,889
Provision for doubtful accounts		295			456			466			179
Property management and other costs		5,009			4,649			4,282			3,962
General and administrative		149			441			821			197
Depreciation and amortization		16,962			16,797			15,152			13,782
Total expenses		48,114			48,134			40,365			41,150
Operating income		31,939			28,601			32,557			26,611
Interest income		670			270			674			345
Interest expense		(20,833	)		(19,678	)		(17,557	)		(13,437	)
Equity in income of unconsolidated joint ventures		1,184			1,125			—			—
Net income	$	12,960		$	10,318		$	15,674		$	13,519

	GGP/Homart						GGP/Homart II
Six months ended June 30,	2005			2004			2005			2004
(In thousands)
Revenues:
Minimum rents	$	112,654		$	101,512			93,242		$	88,710
Tenant recoveries		47,274			46,656			45,578			42,925
Overage rents		1,669			1,168			1,594			1,436
Other		4,073			3,321			3,925			2,204
Total revenues		165,670			152,657			144,339			135,275
Expenses:
Real estate taxes		14,796			13,929			13,737			12,492
Repairs and maintenance		13,209			12,786			9,197			8,915
Marketing		4,924			4,796			4,867			4,854
Other property operating costs		17,580			20,529			14,279			18,253
Provision for doubtful accounts		625			891			1,077			708
Property management and other costs		10,074			9,246			8,370			7,935
General and administrative		248			522			1,005			329
Depreciation and amortization		33,982			33,007			30,176			27,858
Total expenses		95,438			95,706			82,708			81,344
Operating income		70,232			56,951			61,631			53,931
Interest income		1,168			631			1,152			751
Interest expense		(41,162	)		(40,109	)		(33,870	)		(26,808	)
Equity in income of unconsolidated joint ventures		2,303			2,264			—			—
Net income	$	32,541		$	19,737		$	28,913		$	27,874

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GENERAL GROWTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 4 MORTGAGE NOTES AND OTHER PROPERTY DEBT PAYABLE

Mortgage notes and other property debt payable reflected in the accompanying consolidated balance sheets at June 30, 2005 and December 31, 2004 consisted of the following:

	June 30,		December 31,
(In thousands)	2005		2004
Fixed-rate debt:
Commercial mortgage-backed securities	$	318,470	$	332,526
Other collateralized mortgage notes and other debt payable		11,431,643		9,036,659
Corporate and other unsecured term loans		1,639,515		1,750,882
Total fixed-rate debt		13,389,628		11,120,067
Variable-rate debt:
Commercial mortgage-backed securities		333,355		361,239
Other collateralized mortgage notes and other debt payable		1,135,483		2,189,059
Credit facilities		—		150,000
Corporate and other unsecured term loans		5,599,935		6,490,582
Total variable-rate debt		7,068,773		9,190,880
Total	$	20,458,401	$	20,310,947

Commercial Mortgage-Backed Securities

In December 2001, the Operating Partnership and certain Unconsolidated Real Estate Affiliates completed the placement of $2.55 billion of non-recourse commercial mortgage pass-through certificates (the “GGP MPTC”). The GGP MPTC was initially collateralized by 27 malls and one office building, including 19 malls then owned by certain Unconsolidated Real Estate Affiliates. At June 30, 2005, the GGP MPTC had a current outstanding principal balance of approximately $946.1 million (including $294.3 million by Unconsolidated Real Estate Affiliates) and was collateralized by ten malls and one office building, including six malls owned by Unconsolidated Real Estate Affiliates.

The GGP MPTC is comprised of both variable-rate and fixed-rate notes which require monthly payments of principal and interest. The certificates represent beneficial interests in three loan groups made by three initial sets of borrowers (the Operating Partnership, GGP/Homart and GGP/Homart II, and GGP Ivanhoe III). The original principal amount of the GGP MPTC was comprised of $1.235 billion attributed to the Operating Partnership, $900 million to GGP/Homart and GGP/Homart II and $415 million to GGP Ivanhoe III. The terms of the notes comprising the GGP MPTC are as follows:

			Weighted-Average
Initial Maturity	Interest Term	Interest Rate	Interest Rate
36 months (1)	Variable	LIBOR (3) plus 60 to 235 basis points	LIBOR (3) plus 80 basis points
51 months (2)	Variable	LIBOR (3) plus 70 to 250 basis points	LIBOR (3) plus 91 basis points
5 years	Fixed	5.01 to 6.18%		5.37	%

(1)	With two no-cost 12-month extension options, one of which was exercised in 2004.
(2)	With two no-cost 18-month extension options.
(3)	3.34% at June 30, 2005.

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GENERAL GROWTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The extension options with respect to the variable-rate notes are subject to obtaining extensions of the interest rate protection agreements which were required to be obtained in conjunction with the GGP MPTC.

Other Collateralized Mortgage Notes and Other Debt Payable

Other collateralized mortgage notes and other debt payable consist primarily of non-recourse notes collateralized by individual or groups of properties and equipment. Substantially all of the mortgage notes are non-recourse to us. Certain mortgage notes may be prepaid but are generally subject to a prepayment penalty equal to a yield-maintenance premium or a percentage of the loan balance. Certain loans have cross-default provisions and are cross-collateralized. Under certain cross-default provisions, a default under any mortgage note included in a cross-defaulted package may constitute a default under all such mortgage notes in the package and may lead to acceleration of the indebtedness due on each property within the collateral package. In general, the cross-defaulted properties are under common ownership. However, debt (totaling $138.6 million) collateralized by two Unconsolidated Properties is cross-defaulted and cross-collateralized with debt (totaling $868.8 million) collateralized by eleven Consolidated Properties.

As of June 30, 2005, the weighted-average interest rate on the fixed-rate collateralized mortgage notes and other debt payable was 5.50% (range of 3.13% to 11.20%). The weighted-average interest rate on variable-rate collateralized mortgage notes and other debt payable, excluding the impact of interest rate swaps, was 4.95% (range of LIBOR plus 76 to 213 basis points).

2004 Credit Facility

We entered into a credit agreement on November 12, 2004 to fund the TRC Merger consideration and, with other cash and financing sources, fund other costs of the merger. The terms of the notes comprising the 2004 Credit Facility are as follows:

			Outstanding at
	Initial		June 30,		December 31,
(In millions)	Capacity		2005		2004
Six-month bridge loan	$	1,145.0		—	$	749.9
Three-year term loan		3,650.0	$	3,519.2		3,650.0
Four-year term loan		2,000.0		1,990.0		2,000.0
Revolving credit facility		500.0		—		150.0
	$	7,295.0	$	5,509.2	$	6,549.9

Principal repayment of the three-year term loan begins in November 2005 with semi-annual payments in 2006, quarterly payments in 2007 and a final $1.8 billion payment in November 2007. Principal repayment of the four-year term loan began in January 2005 with quarterly payments scheduled through September 2008 and a final $1.9 billion payment in November 2008. During the quarter ended June 30, 2005, the rate on the four-year term loan was reduced by 25 basis points to LIBOR plus 200 basis points. The 2004 Credit Facility currently bears interest at a weighted-average rate of LIBOR plus approximately 216 basis points.

We are generally required to apply the net proceeds of future mortgage financings and refinancings, sales of equity, and asset dispositions (including by casualty or condemnation) toward prepayment of the 2004 Credit Facility in accordance with various priorities set out in the facility. Exceptions to this requirement include the acquisition or repair of assets useful in our business in an aggregate amount of up to $500 million annually and other items. The 2004 Credit Facility is secured by a pledge of the Operating Partnership’s ownership interest in

18 of 44

GENERAL GROWTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

TRCLP and in GGPLP L.L.C and also by a pledge of the interest in an operating account in which we will deposit any distributions the Operating Partnership receives from our interests in TRCLP.

During the term of the facility, we are subject to customary affirmative and negative covenants. Upon the occurrence of an event of default contained in the 2004 Credit Facility, the lenders under the facilities will have the option of declaring immediately due and payable all amounts outstanding under the facility. The 2004 Credit Facility contains events of default including failure to maintain our status as a REIT under the Internal Revenue Code, failure to remain listed on the New York Stock Exchange and such customary events as nonpayment of principal, interest, fees or other amounts, breach of representations and warranties, breach of covenant, cross-default to other indebtedness and certain bankruptcy events.

Unsecured Term Loans

In conjunction with the TRC Merger, we assumed their publicly-traded unsecured debt. At June 30, 2005 such debt totals $1.45 billion, bears interest at fixed rates ranging from 3.65% to 8.00% and matures at various dates from 2008 to 2013.

In conjunction with our acquisition of JP Realty in 2002, we assumed $100 million of ten-year senior unsecured notes which bear interest at a fixed rate of 7.29% and were issued by PDC in March 1998. The notes require semi-annual interest payments. Annual principal payments of $25 million as provided by the terms of the notes began in March 2005 and continue until the loan is fully repaid in March 2008.

Interest Rate Swaps

Concurrent with the issuance of the GGP MPTC certificates, we purchased interest rate protection agreements which were structured to limit our exposure to interest rate fluctuations. An equal amount of interest rate protection agreements were simultaneously sold to fully offset the effect of these agreements and to recoup a substantial portion of the cost of such agreements.

To achieve a more desirable balance between fixed and variable-rate debt, we have also entered into certain swap agreements as follows:

				2004 Credit
				Facility –
				Three-year			Property
	GGP MPTC			Term Loan			Specific
Total notional amount (in millions)	$	125.0		$	350.0		$	387.9
Average fixed effective rate (pay rate)		4.59	%		3.43	%		5.26	%
Variable interest rate of related debt (receive rate)	LIBOR + .93%			LIBOR + 2.25%			LIBOR + 1.67%

Such swap agreements have been designated as cash flow hedges and are intended to hedge our exposure to future interest rate changes on the related variable-rate debt.

Letters of Credit and Surety Bonds

We had outstanding letters of credit and surety bonds of $197 million as of June 30, 2005. The letters of credit and surety bonds were primarily issued in connection with insurance requirements, special real estate assessments and construction obligations.

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GENERAL GROWTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 5 COMMON DISTRIBUTIONS

The following chart summarizes distributions on our common stock and the Common Units in 2005 and 2004.

							Operating
					General		Partnership
	Amount				Growth		Limited
	Per				Stockholders		Partners
Declaration Date	Share		Record Date	Payment Date	Amount		Amount
					(In thousands)
July 5, 2005	$	0.36	July 15, 2005	July 29, 2005	$	85,703	$	19,325
April 4, 2005		0.36	April 15, 2005	April 29, 2005		85,603		19,325
January 7, 2005		0.36	January 17, 2005	January 31, 2005		84,506		19,992
August 20, 2004		0.36	October 15, 2004	October 29, 2004		78,727		19,992
July 2, 2004		0.30	July 15, 2004	July 30, 2004		65,575		16,662
April 5, 2004		0.30	April 15, 2004	April 30, 2004		65,357		16,704
January 5, 2004		0.30	January 15, 2004	January 30, 2004		65,193		16,714

NOTE 6 COMMITMENTS AND CONTINGENCIES

In the normal course of business, from time to time, we are involved in legal actions relating to the ownership and operations of our properties. In management’s opinion, the liabilities if any, that may ultimately result from such legal actions are not expected to have a material adverse effect on our consolidated financial position, results of operations or liquidity.

We lease land or buildings at certain properties from third parties. Consolidated rental expense, including participation rent and excluding amortization of below market land leases, was $4.2 million for the three months ended June 30, 2005, $0.7 million for the three months ended June 30, 2004, $8.4 million for the six months ended June 30, 2005 and $1.4 million for the six months ended June 30, 2004. The leases generally provide for a right of first refusal in our favor in the event of a proposed sale of the property by the landlord.

We periodically enter into contingent agreements for the acquisition of properties. Each acquisition is subject to satisfactory completion of due diligence and, in the case of property acquired under development, completion of the project .

TRC acquired various assets, including Summerlin, a master-planned community in suburban Las Vegas, Nevada, in the acquisition of The Hughes Corporation (“Hughes”) in 1996. In connection with the acquisition of Hughes, TRC entered into a Contingent Stock Agreement (“CSA”) for the benefit of the former Hughes owners or their successors (“beneficiaries”). Under the terms of the CSA, shares of TRC common stock were issuable to the beneficiaries based on the appraised values of defined asset groups, including Summerlin, at specified termination dates through 2009 and/or cash flows from the development and/or sale of those assets prior to the termination dates.

We assumed TRC’s obligation under the CSA to deliver shares of our common stock twice a year to beneficiaries under the CSA. The amount of shares is based upon a formula set forth under the CSA and upon our stock price. Such issuances could be dilutive to our existing stockholders if the delivery obligation is satisfied by the issuance of new shares rather than from treasury stock or shares purchased on the open market. We account for the beneficiaries’ share of earnings from the assets as an operating expense. We will account for any distributions to the beneficiaries in 2009, which could be significant, in connection with a valuation related to assets that we own as of such date as additional investments in the

20 of 44

GENERAL GROWTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

related assets (that is, contingent consideration). A total of 519,164 shares of our common stock were issued in the six months ended June 30, 2005 pursuant to the CSA.

NOTE 7 DISCONTINUED OPERATIONS

In August 2004, our Board of Directors approved plans to dispose of certain of the commercial/business properties originally acquired in the JP Realty acquisition in July 2002. The sale closed on November 1, 2004 for $67.4 million and a gain of approximately $11.2 million was recognized.

Pursuant to SFAS 144, we have reclassified the operations of the industrial properties to discontinued operations in the accompanying consolidated financial statements as follows. Revenues and net income, before minority interests, were as follows:

	Three
	Months		Six Months
	Ended		Ended
	June 30,		June 30,
(In thousands)	2004		2004
Revenues	$	1,871	$	3,632
Net income		1,126		2,117

NOTE 8 RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 2005, the Emerging Issues Task Force (“EITF”) reached a consensus on EITF 04-05, “Investor’s Accounting for an Investment in a Limited Partnership When the Investor Is the Sole General Partner and the Limited Partners Have Certain Rights” (“EITF 04-05”) which provides guidance on when a sole general partner should consolidate a limited partnership. A sole general partner in a limited partnership is presumed to control that limited partnership and therefore should include the limited partnership in its consolidated financial statements, regardless of the sole general partner’s ownership interest in the limited partnership. The control presumption may be overcome if the limited partners have the ability to remove the sole general partner or otherwise dissolve the limited partnership. Other substantive participating rights by the limited partners may also overcome the control presumption. If ratified by the FASB, this consensus would be effective after the date of the ratification for general partners of all newly formed limited partnerships and existing limited partnerships for which the partnership agreements are modified. For general partners in all other limited partnerships, this consensus would be effective no later than the beginning of the first reporting period in fiscal years beginning after December 15, 2005. We do not expect EITF 04-05 to have a significant impact on our financial statements.

In May 2005, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 154, “Accounting Changes and Error Corrections — A Replacement of APB Opinion No. 20 and FASB Statement No. 3” (“SFAS 154”). This new standard replaces APB Opinion No. 20, “Accounting Changes”, and FASB Statement No. 3, “Reporting Accounting Changes in Interim Financial Statements”. Among other changes, SFAS 154 requires that a voluntary change in accounting principle be applied retrospectively with all prior period financial statements presented on the new accounting principle, unless it is impracticable to do so. SFAS 154 also provides that:

• A change in method of depreciating or amortizing a long-lived nonfinancial asset be accounted for as a change in estimate (prospectively) that was effected by a change in accounting principle, and

• Correction of errors in previously issued financial statements should be termed a “restatement.”

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

SFAS 154 is effective for accounting changes and correction of errors made in fiscal years beginning after December 15, 2005. Early adoption of this standard is permitted for accounting changes and correction of errors made in fiscal years beginning after June 1, 2005.

On February 7, 2005, the SEC staff published certain views concerning the accounting by lessees for leasehold improvements, rent holidays, lessor funding of lessee expenditures and other tenant inducements. Although the application of these views to lessors was not specified by the SEC and a formal accounting standard modifying existing practice on these items has not been issued or proposed, we have conducted a review of our accounting relative to such items. We believe that our leasing practices and agreements with a majority of our tenants provide that leasehold improvements that we fund represent fixed assets that we own and control. We also believe that leases with such arrangements are properly accounted for as commencing at the completion of construction of such assets. A smaller percentage of our tenant leases do not provide for landlord funding but rather provide for tenant funded construction and furnishing of the leased premises prior to the formal commencement of the lease. We have concluded that the cumulative incremental straight-line rental revenue that would have been recognized on such leases if they had commenced on tenant possession of such space rather than the lease-specified commencement date to be approximately $10.1 million at December 31, 2004 which was recognized in the three months ended March 31, 2005. The recognition of straight-line rental revenue on this accelerated basis will have no effect on periodic or cumulative cash flows to be received pursuant to a tenant lease.

On December 16, 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets-An Amendment of APB Opinion No. 29” (“SFAS 153”). The amendments made by SFAS 153 are based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. Further, the amendments eliminate the narrow exception for nonmonetary exchanges of similar productive assets and replace it with a broader exception for exchanges of nonmonetary assets that do not have “commercial substance.” SFAS 153 is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The adoption of SFAS 153 on June 15, 2005 did not have a material effect on our consolidated financial statements.

On December 16, 2004, the FASB issued SFAS No. 123 (Revised 2004), “Share-Based Payment” (“SFAS 123R”). SFAS 123R replaces SFAS 123, which we adopted in the second quarter of 2002. SFAS 123R requires that compensation cost relating to share-based payment transactions be recognized in financial statements and measured based on the fair value of the equity or liability instruments used. SFAS 123R is effective as of the first interim or annual reporting period that begins after June 15, 2005. We do not believe that the adoption of SFAS 123R will have a material effect on our consolidated financial statements.

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity,” (“SFAS 150”) which establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability. The effective date of a portion of SFAS 150 has been indefinitely postponed by the FASB. We did not enter into new financial instruments subsequent to May 2003 which would fall within the scope of this statement. None of our transactions, arrangements or financial instruments, except for certain ventures acquired in the TRC Merger, have been identified that appear to meet the criteria for liability recognition in accordance with paragraphs 9 and 10 under SFAS 150 due to the indefinite life of the joint venture arrangements. Therefore, if the effectiveness of the measurement and classification provisions is no longer postponed, we would reclassify to liabilities approximately $15 million of minority interest with respect to such acquired ventures, but no amount for any of our other ventures.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 9 INCOME TAXES

We elected to be taxed as a real estate investment (“REIT”) trust under sections 856-860 of the Code, commencing with our taxable year beginning January 1, 1993. To qualify as a REIT, we must meet a number of organizational and operational requirements, including requirements to distribute at least 90% of our ordinary taxable income and to distribute to stockholders or pay tax on 100% of capital gains and to meet certain asset and income tests. It is management’s current intention to adhere to these requirements.

We also have subsidiaries which we have elected to be treated as taxable real estate investment trust subsidiaries and which are, therefore, subject to Federal and state income taxes. Our primary TRSs include GGMI, entities which own our planned community properties and other TRSs acquired in the TRC Merger. Current Federal income taxes payable by certain of these TRSs are likely to increase in future years as we utilize certain net loss carry forwards of such entities and as certain planned community developments are completed. Such increases could be significant.

The income tax provision was insignificant in 2004. The provision for income taxes for the three and six months ended June 30, 2005 was as follows:

	Three Months		Six Months
	Ended		Ended
	June 30,		June 30,
(In thousands)	2005		2005
Current	$	1,125	$	1,910
Deferred		12,936		10,844
Total	$	14,061	$	12,754

Deferred tax liabilities, net of deferred tax assets, were $1.3 billion at both June 30, 2005 and December 31, 2004. Due to the uncertainty of the realization of certain net loss carryforwards, we established valuation allowances. The majority of the valuation allowances related to net operating loss carryforwards where there is uncertainty regarding their realizability and will more likely than not, expire unused. However, in the three months ended March 31, 2005 we recognized a deferred income tax benefit primarily due to a reduction in certain GGMI tax asset valuation allowances due to an assessment of tax structuring opportunities now available due to the TRC Merger.

One of our taxable subsidiaries is subject to an ongoing federal income tax examination. We do not believe that the outcome of this examination will have a material adverse effect on our consolidated results of operations, cash flows, or financial position.

NOTE 10 SEGMENTS

We have two business segments which offer different products and services. Our segments are managed separately because each requires different operating strategies or management expertise. We do not distinguish or group our consolidated operations on a geographic basis. Further, all material operations are within the United States and no customer or tenant comprises more than 10% of consolidated revenues. Our reportable segments are as follows:

• Retail and Other — includes the operation, development and management of regional shopping centers, office and industrial properties, downtown specialty marketplaces, the retail and non-retail rental components of mixed-use projects and community retail centers

• Community Development — includes the development and sale of land, primarily in large-scale, long-term community development projects in and around Columbia, Maryland; Summerlin, Nevada; and Houston, Texas

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Prior to the TRC Merger, substantially all of our business involved ownership and operation of shopping centers. As we evaluated operating results and resource allocation on a property-by-property basis, we had concluded that we had a single reportable segment.

The operating measure used to assess operating results for the business segments is Real Estate Property Net Operating Income (“NOI”). Management believes that NOI provides useful information about a property’s operating performance.

The accounting policies of the segments are the same as those described in our 10-K, except that we account for unconsolidated real estate ventures using the proportionate share method rather than the equity method. Under the proportionate share method, our share of the revenues and expenses of the Unconsolidated Properties are combined with the revenues and expenses of the Consolidated Properties. Under the equity method, our share of the net revenues and expenses of the Unconsolidated Properties are reported as a single line item, “Equity in income of unconsolidated affiliates,” in our Consolidated Statements of Operations and Comprehensive Income.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Operating results for the segments were as follows:

	Three Months Ended						Three Months Ended
	June 30, 2005						June 30, 2004
	Retail		Community				Retail
(In thousands)	and Other		Development		Total		and Other
Segment Basis (a)
Property revenues:
Minimum rents	$	502,746	$	—	$	502,746	$	297,693
Tenant recoveries		228,585		—		228,585		136,290
Overage rents		10,840		—		10,840		5,262
Land sales		—		143,001		143,001		—
Other		45,388		—		45,388		15,349
Total property revenues		787,559		143,001		930,560		454,594
Property operating expenses:
Real estate taxes		66,543		—		66,543		37,573
Repairs and maintenance		60,364		—		60,364		32,591
Marketing		16,157		—		16,157		13,803
Other property operating costs		128,010		1		128,011		63,056
Land sales operations		—		113,280		113,280		—
Provision for doubtful accounts		4,926		—		4,926		3,115
Total property operating expenses		276,000		113,281		389,281		150,138
Real estate property net operating income	$	511,559	$	29,720	$	541,279	$	304,456
Unconsolidated Properties
Property revenues:
Minimum rents	$	93,348	$	—	$	93,348	$	65,969
Tenant recoveries		44,867		—		44,867		30,821
Overage rents		1,140		—		1,140		559
Land sales		—		28,656		28,656		—
Other		19,371		—		19,371		2,030
Total property revenues		158,726		28,656		187,382		99,379
Property operating expenses:
Real estate taxes		13,762		—		13,762		8,725
Repairs and maintenance		10,158		—		10,158		7,271
Marketing		3,627		—		3,627		3,288
Other property operating costs		33,670		—		33,670		14,279
Land sales operations		—		18,932		18,932		—
Provision for doubtful accounts		668		—		668		550
Total property operating expenses		61,885		18,932		80,817		34,113
Real estate property net operating income	$	96,841	$	9,724	$	106,565	$	65,266
Consolidated Properties
Property revenues:
Minimum rents	$	409,398	$	—	$	409,398	$	231,724
Tenant recoveries		183,718		—		183,718		105,469
Overage rents		9,700		—		9,700		4,703
Land sales		—		114,345		114,345		—
Other		26,017		—		26,017		13,319
Total property revenues		628,833		114,345		743,178		355,215
Property operating expenses:
Real estate taxes	$	52,781		—		52,781		28,848
Repairs and maintenance		50,206		—		50,206		25,320
Marketing		12,530		—		12,530		10,515
Other property operating costs		94,340		1		94,341		48,777
Land sales operations		—		94,348		94,348		—
Provision for doubtful accounts		4,258		—		4,258		2,565
Total property operating expenses		214,115		94,349		308,464		116,025
Real estate property net operating income	$	414,718	$	19,996	$	434,714	$	239,190

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

	Six Months Ended						Six Months Ended
	June 30, 2005						June 30, 2004
	Retail		Community				Retail
(In thousands)	and Other		Development		Total		and Other
Segment Basis (a)
Property revenues:
Minimum rents	$	1,009,898	$	—	$	1,009,898	$	584,213
Tenant recoveries		454,316		—		454,316		270,241
Overage rents		26,153		—		26,153		14,426
Land sales		—		212,974		212,974		—
Other		82,427		1		82,428		26,554
Total property revenues		1,572,794		212,975		1,785,769		895,434
Property operating expenses:
Real estate taxes		133,725		—		133,725		74,871
Repairs and maintenance		125,105		—		125,105		64,702
Marketing		32,114		—		32,114		27,535
Other property operating costs		247,549		2		247,551		117,701
Land sales operations		—		172,785		172,785		—
Provision for doubtful accounts		10,237		—		10,237		6,605
Total property operating expenses		548,730		172,787		721,517		291,414
Real estate property net operating income	$	1,024,064	$	40,188	$	1,064,252	$	604,020
Unconsolidated Properties
Property revenues:
Minimum rents	$	190,016	$	—	$	190,016	$	130,794
Tenant recoveries		88,591		—		88,591		62,551
Overage rents		2,867		—		2,867		1,372
Land sales		—		37,223		37,223		—
Other		34,336		—		34,336		3,544
Total property revenues		315,810		37,223		353,033		198,261
Property operating expenses:
Real estate taxes		27,440		—		27,440		17,901
Repairs and maintenance		21,082		—		21,082		14,746
Marketing		7,216		—		7,216		6,580
Other property operating costs		63,189		—		63,189		27,703
Land sales operations		—		24,590		24,590		—
Provision for doubtful accounts		1,725		—		1,725		1,255
Total property operating expenses		120,652		24,590		145,242		68,185
Real estate property net operating income	$	195,158	$	12,633	$	207,791	$	130,076
Consolidated Properties
Property revenues:
Minimum rents	$	819,882	$	—	$	819,882	$	453,419
Tenant recoveries		365,725		—		365,725		207,690
Overage rents		23,286		—		23,286		13,054
Land sales		—		175,751		175,751		—
Other		48,091		1		48,092		23,010
Total property revenues		1,256,984		175,752		1,432,736		697,173
Property operating expenses:
Real estate taxes	$	106,285		—		106,285		56,970
Repairs and maintenance		104,023		—		104,023		49,956
Marketing		24,898		—		24,898		20,955
Other property operating costs		184,360		2		184,362		89,998
Land sales operations		—		148,195		148,195		—
Provision for doubtful accounts		8,512		—		8,512		5,350
Total property operating expenses		428,078		148,197		576,275		223,229
Real estate property net operating income	$	828,906	$	27,555	$	856,461	$	473,944

(a)  Segment basis results include both Consolidated Properties and the Operating Partnership’s ownership share of the results of operations of Unconsolidated Properties.

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(Unaudited)

The following reconciles segment basis NOI to GAAP-basis operating income and income from continuing operations:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2005			2004			2005			2004
(In thousands)
Real estate property net operating income:
Segment basis	$	541,279		$	304,456		$	1,064,252		$	604,020
Unconsolidated Properties		(106,565	)		(65,266	)		(207,791	)		(130,076	)
Consolidated Properties		434,714			239,190			856,461			473,944
Management and other fees		23,252			20,163			42,815			38,864
Property management and other costs		(22,489	)		(17,853	)		(43,548	)		(36,695	)
Headquarters/regional costs		(20,995	)		(6,459	)		(34,573	)		(12,629	)
General and administrative		(3,635	)		(2,812	)		(6,446	)		(5,002	)
Depreciation and amortization		(173,075	)		(85,757	)		(336,384	)		(158,660	)
Other (a)		433			(1,003	)		845			(1,838	)
Operating income		238,205			145,469			479,170			297,984
Interest income		2,489			366			4,706			783
Interest expense		(244,842	)		(90,460	)		(489,870	)		(177,547	)
Provision for income taxes		(14,061	)		(382	)		(12,754	)		(389	)
Income allocated to minority interests		(8,786	)		(22,900	)		(21,642	)		(48,338	)
Equity in income of unconsolidated affiliates		29,647			18,154			56,107			36,084
Income from continuing operations	$	2,652		$	50,247		$	15,717		$	108,577

(a) Reflects minority interests in Consolidated Properties NOI and, in 2004, discontinued operations.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

All references to numbered Notes are to specific notes to our Consolidated Financial Statements included in this Quarterly Report on Form 10-Q and which Notes are incorporated into the applicable response by reference. The following discussion should be read in conjunction with such Consolidated Financial Statements and related Notes. Capitalized terms used, but not defined, in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) have the same meanings as in such Notes.

FORWARD-LOOKING INFORMATION

We may make forward-looking statements in this Quarterly Report, in other reports and proxy statements that we file with the SEC and in other information that we release publicly or provide to investors. In addition, our senior management might make forward-looking statements orally to analysts, investors, the media and others.

Forward-looking statements include:

• Projections of our revenues, income, earnings per share, Funds From Operations (“FFO”), capital expenditures, dividends, leverage, capital structure or other financial items;

• Descriptions of plans or objectives of our management for future operations, including pending acquisitions and debt repayment or restructuring;

• Forecasts of our future economic performance; and

• Descriptions of assumptions underlying or relating to any of the foregoing.

In this Quarterly Report, for example, we make forward-looking statements discussing our expectations about:

• Future repayment of debt, including the ratio of variable to fixed-rate debt in our portfolio;

• Future interest rates; and

• Future development and redevelopment expenditures.

Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements often include words such as “anticipate”, “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “target,” “can,” “could,” “may,” “strive,” “should,” “will,” “would” or similar expressions. Forward-looking statements should not be unduly relied upon. They describe our expectations about the future and are not guarantees. Forward-looking statements speak only as of the date they are made and we disclaim any obligation to update them except as required by law.

There are several factors, many beyond our control, which could cause results to differ materially from our expectations. Some of these factors are described in Exhibit 99.1 to this Quarterly Report. Other factors, such as credit, market, operational, liquidity, interest rate and other risks, are described elsewhere in this Quarterly Report. Any factor described in this Quarterly Report could by itself, or together with one or more other factors, adversely affect our business, results of operations or financial condition. There are also other factors that we have not described in this Quarterly Report that could cause results to differ from our expectations.

MANAGEMENT’S OVERVIEW & SUMMARY

Our primary business is the ownership, management, leasing and development of retail and office rental property. As of June 30, 2005, we had ownership interest in and management responsibility for a portfolio of 210 regional shopping malls in 44 states. We strive to increase cash flow and net income by

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acquiring, developing, renovating and managing retail rental property in major and middle markets throughout the United States.

We provide on-site management and other services to substantially all of our properties, including properties which are owned through joint venture arrangements and are unconsolidated for GAAP purposes. Our management operating philosophies and strategies are generally the same whether the properties are consolidated or unconsolidated. As a result, we believe that financial information and operating statistics with respect to all properties, both consolidated and unconsolidated, provide important insights into our operating results. Collectively, we refer to our Consolidated and Unconsolidated Properties as our “Company Portfolio” and the retail portion of the Company Portfolio as the “Retail Company Portfolio.”

Our business strategy includes selectively making strategic acquisitions to enhance the yields of the acquired properties through subsequent proactive property management and leasing (including tenant remerchandising), operating cost reductions, physical expansions, redevelopments and capital reinvestment. Some of the actions that we take to increase productivity include changing the tenant mix, adding vendor carts or kiosks and full expansions or renovations of centers. Acquisitions have included single centers, privately held portfolios and public-to-public purchases such as TRCLP.

We have not acquired any properties in 2005. However, acquisitions in 2004, as detailed in the following chart, were the most significant factor in overall increases from year to year in our cash flows and operating income.

		Gross
	Acquisition	Purchase
	Date	Price
		(In millions)
A 50% ownership interest in Burlington Town Center	January 7	$	10.25
Redlands Mall	January 16		14.25
The remaining 50% ownership interest in Town East Mall	March 1		44.5
Four Seasons Town Centre	March 5		161.0
A 33 1/3% ownership interest in GGP/Sambil Costa Rica	April 30		9.7
A 50% ownership interest in Riverchase Galleria	May 11		166.0
Mall of Louisiana	May 12		265.0
The Grand Canal Shoppes	May 17		766.0
A 50% ownership interest in GGP/NIG Brazil	July 30		7.0
Stonestown Galleria	August 13		312.0
The Rouse Company (TRCLP)	November 12		14,242.0
		$	15,997.7

Acquisitions of properties are accounted for utilizing the purchase method and accordingly, the results of operations are included in our results of operations subsequent to the respective dates of acquisition.

The expansion and renovation of a property may also result in increased cash flows and operating income as a result of increased customer traffic, trade area penetration and improved competitive position of the property. As of June 30, 2005, we had 17 major approved redevelopment projects underway, each with budgeted projected expenditures, at our ownership share, in excess of $10 million. At one of these redevelopments, we began construction in May 2005 of a multi-use project that is expected to include a significant residential component.

In addition to property redevelopment, we also develop retail centers from the ground-up. In August 2004, we completed the ground-up development of Jordan Creek Town Center in West Des Moines, Iowa. The center, costing approximately $175 million, is a 1.9 million square foot enclosed regional

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shopping mall with three anchor stores, a hotel and an amphitheater. We have two other new retail center development projects currently under construction, Shops at La Cantera which is scheduled to open September 2005 and Lincolnshire Commons which is scheduled to open in 2007. We also have 13 other potential new retail or mixed-use developments that are projected to open in 2006 through 2008.

We believe that the most significant operating factor affecting incremental cash flow and net operating income is increased rents (either base rental revenue or overage rents) earned from tenants at our properties. These rental revenue increases are primarily achieved by:

• Renewing expiring leases and re-leasing existing space at rates higher than expiring or existing rates. The average annual new/renewal lease rate for our Consolidated Retail Properties for 2005 was $36.75 per square foot which was higher than the average annualized in place rent per square foot, as detailed in the table immediately below. Lease durations for in-line specialty stores typically average approximately ten years. As a result, many leases that are expiring now were signed in the early to mid 1990’s during a challenging retail environment.

• Increasing occupancy and expanding rentable square footage at the properties so that more space is generating rent. The occupancy percentage at properties which are not under redevelopment in our Retail Company Portfolio was 90.7 percent at June 30, 2005, comparable to the occupancy at June 30, 2004.

• Increased tenant sales in which we participate through overage rents. Tenant sales per square foot in our Retail Company Portfolio increased 5.4 percent over 2004 to $421 per square foot primarily due to our focus on acquisitions of premier properties with high productivity, including TRCLP, as well as our focus on operating income growth through aggressive management, remerchandising and reinvestment.

The following table summarizes additional operating statistics as of June 30, 2005.

							Retail
	Consolidated Retail			Unconsolidated			Company
Operating statistics (a)	Properties			Retail Properties			Portfolio (b)
Occupancy		90.5	%		91.0	%		90.7	%
Trailing 12 month total tenant sales per sq. ft. (c)	$	412		$	439		$	421
% change in total sales (c)		5.4	%		5.4	%		5.4	%
% change in comparable sales (c)		3.2	%		3.6	%		3.3	%
Mall and Freestanding GLA excluding space under redevelopment (in sq. ft.)		41,470,429			18,851,702			60,322,131
Certain financial information
Average annualized in place rent per sq. ft.	$	32.37		$	35.84
Average rent per sq. ft. for new/renewal leases signed in 2005		36.75			39.32
Average rent per sq. ft. for leases expiring in 2005		29.63			32.31

(a)	Data is for 100% of the Mall GLA in each portfolio, including those centers that are owned in part by Unconsolidated Real Estate Affiliates. Excludes properties currently being redeveloped and/or remerchandised and miscellaneous (non-mall) properties.
(b)	Weighted average amounts.
(c)	Due to tenant sales reporting timelines, data presented is as of May 2005.

Our Community Development segment includes the development and sale of residential and commercial land, primarily in large-scale projects in and around Columbia, Maryland; Houston, Texas and Summerlin, Nevada. We develop and sell finished and undeveloped land in such communities to

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builders and other developers for residential, commercial and other uses. Our Community Development segment reported real estate property net operating income of $40.2 million during the six months ended June 30, 2005. Land sale activity at our newest project, the Bridgelands in Houston, Texas, is expected to commence in late 2005 or early 2006.

During the first six months of 2005, we obtained approximately $2.9 billion of consolidated debt through new financings and refinancings. Our share of debt issued by our Unconsolidated Real Estate Affiliates totaled approximately $300 million during the same period. Proceeds from the issuances were used, in part, to repay $2.2 billion of variable-rate debt. The new debt, substantially all of which is at fixed rates, bears interest at a weighted-average rate of approximately 5.05%.

Trends in Funds From Operations (“FFO”) as defined by The National Association of Real Estate Investment Trusts (“NAREIT”) have not been presented in this management’s discussion and analysis of operations, as FFO, under current SEC reporting guidelines, can only be considered a supplemental measure of operating performance.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2005 AND 2004

See Note 10 for a reconciliation of Real Estate Property Net Operating Income for our two operating segments to GAAP-basis Income from continuing operations.

Retail and Other Segment

	For the Three Months Ended
	June 30,
(In thousands)	2005		2004		$ Increase		% Increase
Property revenues:
Minimum rents	$	502,746	$	297,693	$	205,053		68.9	%
Tenant recoveries		228,585		136,290		92,295		67.7
Overage rents		10,840		5,262		5,578		106.0
Other		45,388		15,349		30,039		195.7
Total property revenues		787,559		454,594		332,965		73.2
Property operating expenses:
Real estate taxes		66,543		37,573		28,970		77.1
Repairs and maintenance		60,364		32,591		27,773		85.2
Marketing		16,157		13,803		2,354		17.1
Other property operating costs		128,010		63,056		64,954		103.0
Provision for doubtful accounts		4,926		3,115		1,811		58.1
Total property operating expenses		276,000		150,138		125,862		83.8
Real estate property net operating income	$	511,559	$	304,456	$	207,103		68.0	%

Minimum rents increased primarily as a result of acquisitions. Minimum rents also include the net effect of above and below-market lease rent accretion pursuant to SFAS 141 and 142 (Note 1) of $7.5 million in 2005 and $9.4 million in 2004.

Tenant recoveries increased $85.0 million as a result of acquisitions and $7.3 million due to higher recoverable expenses at various properties.

Overage rents and other property revenues increased primarily as a result of acquisitions.

Real estate taxes increased $26.0 million as a result of acquisitions and $3.0 million as a result of increased property taxes at certain of our properties, including Jordan Creek which opened in August 2004.

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GENERAL GROWTH PROPERTIES, INC.

Repairs and maintenance, marketing, and other property operating costs increased primarily due to acquisitions.

Real estate taxes, repairs and maintenance and other property operating expenses are generally recoverable from tenants and the increases in these expenses are generally consistent with the increase in tenant recovery revenues.

Community Development Segment

Land sale revenues totaled $143.0 million and land sales operations expenses totaled $113.3 million in 2005. The Community Development segment is comprised of residential and commercial land, primarily in large-scale projects, which was acquired in the TRC Merger.

Other Significant Revenues and Expenses

	For the Three Months Ended
	June 30,
(In thousands)	2005		2004		$ Increase		% Increase
Management and other fees	$	23,252	$	20,163	$	3,089		15.3	%
Property management and other costs		43,484		24,312		19,172		78.9
Depreciation and amortization		173,075		85,757		87,318		101.8
Interest expense		244,842		90,460		154,382		170.7
Provision for income taxes		14,061		382		13,679		3,580.9
Equity in income of unconsolidated affiliates		29,647		18,154		11,493		63.3

Management and other fees for 2005 increased approximately $3.1 million compared to 2004. The acquisition of TRC resulted in an increase of approximately $3.8 million in fees.

Property management and other costs as well as depreciation and amortization increased in 2005 as compared to 2004 primarily as a result of acquisitions. Because acquisitions are initially recorded at fair value, the depreciable basis and the corresponding depreciation expense for recent acquisitions is generally higher than for acquisitions in previous years or for properties or projects we develop ourselves.

Interest expense increased $134.0 million in 2005 as compared to 2004 as a result of increased debt associated with acquisitions and $20.4 million as a result of higher debt levels primarily as a result of redevelopments, working capital requirements and higher average interest rates in comparison to the same period last year. The weighted average interest rate on our outstanding debt was 5.45% at June 30, 2005 compared to approximately 4.69% at June 30, 2004. See Item 3, Quantitative and Qualitative Disclosures About Market Risk for additional information regarding the potential impact of future interest rate increases.

The increase in the provision for income taxes for 2005 primarily relates to operations acquired in the TRC Merger, including the Community Development segment, which are conducted by various TRS entities.

Equity in income of unconsolidated affiliates increased in 2005 as compared to 2004 primarily due to the Riverchase and GGP/NIG Brazil joint venture acquisitions in 2004 and the operations of unconsolidated affiliates of TRCLP which were acquired in conjunction with the TRC Merger.

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GENERAL GROWTH PROPERTIES, INC.

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004

Retail and Other Segment

	For the Six Months Ended
	June 30,
(In thousands)	2005		2004		$ Increase		% Increase
Property revenues:
Minimum rents	$	1,009,898	$	584,213	$	425,685		72.9	%
Tenant recoveries		454,316		270,241		184,075		68.1
Overage rents		26,153		14,426		11,727		81.3
Other		82,427		26,554		55,873		210.4
Total property revenues		1,572,794		895,434		677,360		75.6
Property operating expenses:
Real estate taxes		133,725		74,871		58,854		78.6
Repairs and maintenance		125,105		64,702		60,403		93.4
Marketing		32,114		27,535		4,579		16.6
Other property operating costs		247,549		117,701		129,848		110.3
Provision for doubtful accounts		10,237		6,605		3,632		55.0
Total property operating expenses		548,730		291,414		257,316		88.3
Real estate property net operating income	$	1,024,064	$	604,020	$	420,044		69.5	%

Minimum rents increased primarily as a result of acquisitions. Minimum rents include the net effect of above and below-market lease rent accretion pursuant to SFAS 141 and 142 (Note 1) of $15.9 million in 2005 and $15.7 million in 2004 and approximately $10.1 million in 2005 related to a change in the commencement period for certain previously recorded leases.

Tenant recoveries increased $173.0 million as a result of acquisitions and $11.0 million due to higher recoverable expenses at various properties.

Overage rents and other property revenues increased primarily as a result of acquisitions.

Real estate taxes increased $53.0 million as a result of acquisitions and $5.9 million as a result of increased property taxes at certain of our properties, including Jordan Creek which opened in August 2004.

Repairs and maintenance, marketing, and other property operating costs increased primarily due to acquisitions.

Real estate taxes, repairs and maintenance and other property operating expenses are generally recoverable from tenants and the increases in these expenses are generally consistent with the increase in tenant recovery revenues.

Community Development Segment

Land sale revenues totaled $213.0 million and land sales operations expenses totaled $172.8 million in 2005. The Community Development segment is comprised of residential and commercial land, primarily in large-scale projects, which was acquired in the TRC Merger.

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Other Significant Revenues and Expenses

	For the Six Months Ended
	June 30,
(In thousands)	2005		2004		$ Increase		% Increase
Management and other fees	$	42,815	$	38,864	$	3,951		10.2	%
Property management and other costs		78,121		49,324		28,797		58.4
Depreciation and amortization		336,384		158,660		177,724		112.0
Interest expense		489,870		177,547		312,323		175.9
Provision for income taxes		12,754		389		12,365		3,178.7
Equity in income of unconsolidated affiliates		56,107		36,084		20,023		55.5

Management and other fees for 2005 increased approximately $4.0 million compared to 2004. The acquisition of TRC resulted in an increase of approximately $7.6 million in fees. This increase was offset by the loss of fees resulting from our acquisition of the remaining 50% interest in Town East in March 2004. As the Town East venture is now wholly-owned and consolidated in our results of operations, GGMI no longer receives management or other fees from this property.

Property management and other costs and depreciation and amortization increased in 2005 as compared to 2004 primarily as a result of acquisitions. Because acquisitions are initially recorded at fair value, the depreciable basis and the corresponding depreciation expense for recent acquisitions is generally higher than for acquisitions in previous years or for properties or projects we develop ourselves.

Interest expense increased $279.0 million in 2005 as compared to 2004 as a result of increased debt associated with acquisitions and $33.3 million as a result of higher debt levels primarily as a result of redevelopments, working capital requirements and higher average interest rates during the current year. The weighted average interest rate on our outstanding debt was 5.45% at June 30, 2005 compared to approximately 4.69% at June 30, 2004. Amortization of purchase accounting adjustments which increased the fair value of our debt acquired in the TRC Merger, decreased interest expense by approximately $25.3 million in the six months ended June 30, 2005 and included approximately $5.3 million related to changes in prior period estimates. See Item 3, Quantitative and Qualitative Disclosures About Market Risk, for additional information regarding the potential impact of future interest rate increases.

The increase in the provision for income taxes for 2005 primarily relates to operations acquired in the TRC Merger, including the Community Development segment, which are conducted by various TRS entities.

Equity in income of unconsolidated affiliates increased in 2005 as compared to 2004 primarily due to the Riverchase and GGP/NIG Brazil joint venture acquisitions in 2004 and the operations of unconsolidated affiliates of TRCLP which were acquired in conjunction with the TRC Merger. A change in the commencement period in 2005 for the recognition of certain straight-line rents on previously recorded leases also contributed approximately $3.6 million of the increase over 2004.

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GENERAL GROWTH PROPERTIES, INC.

Liquidity and Capital Resources

Our primary uses and sources of cash are as follows:

Uses		Sources
Short-term liquidity and capital needs such as:
•	Tenant construction allowances	•	Operating cash flow, including the
•	Minor improvements made to individual		distributions of our share of cash flow
	properties that are not recoverable through		produced by our Unconsolidated Real Estate
	common area maintenance charges to		Estate Affiliates
	tenants	•	Land sales from the Community
•	Dividend payments		Development segment
•	Debt repayment requirements, including	•	Borrowings under the $500 million
	both principal and interest		revolving credit facility
•	Stock repurchases
Longer-term liquidity needs such as:
•	Acquisitions	•	Secured loans collateralized by individual
•	New development		properties
•	Major renovation or expansion programs at	•	Unsecured loans at either a venture or
	individual properties		company level
•	Debt repayment requirements, including	•	Construction loans
	both principal and interest	•	Mini-permanent loans
•	Purchase of Anchor stores available as a	•	Long-term project financing
	result of consolidations, including the	•	Joint venture financing with institutional
	Federated/May merger*		partners
		•	Equity securities
		•	Potential sale of certain office and
			industrial property acquired in the TRC
			Merger

* In February 2005, May Department Stores Company and Federated Department Stores, Inc. announced a merger agreement which is expected to close in the third quarter of 2005. In July 2005, Federated announced planned store closings which included 14 of our Anchor stores.

Cash Flows from Operating Activities

Net cash provided by operating activities was $380 million for the six months ended June 30, 2005 and $343 million for the comparable prior year period. Substantially all of the increase was attributable to acquisitions in 2004.

Cash Flows from Investing Activities

Net cash used in investing activities was $92 million for the six months ended June 30, 2005 and $1.4 billion for the comparable prior year period. Substantially all of the decrease was attributable to acquisitions in 2004. There have been no significant acquisitions in 2005.

Cash used in development and redevelopment activities (including our pro rata share of our Unconsolidated Real Estate Affiliates) was approximately $205 million for the six months ended June 30, 2005 and approximately $230 million for the comparable prior year period. As of June 30, 2005, we had 17 major approved redevelopment projects underway (each with budgeted projected expenditures, at our ownership share, in excess of $10 million), two new retail center development projects under construction and 13 potential new development projects. Total projected expenditures (including our pro rata share of our

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Unconsolidated Real Estate Affiliates) for the 17 redevelopment projects and the two new retail center development projects under construction were approximately $900 million as of June 30, 2005.

Cash Flows from Financing Activities

Net cash used by financing activities was $276 million for the six months ended June 30, 2005 and net cash provided by financing activities was $1.1 billion for the comparable prior year period.

Our consolidated debt and our pro rata share of the debt of our Unconsolidated Real Estate Affiliates, after taking into effect interest rate swap agreements, were as follows:

	June 30,			December 31,
(In millions)	2005			2004
Consolidated:
Fixed-rate debt	$	14,252		$	11,860
Variable-rate debt:
2004 Credit Facility:
Six-month bridge loan		—			750
Three-year term loan		3,519			3,650
Four-year term loan		1,990			2,000
Revolving credit facility		—			150
Total 2004 Credit Facility		5,509			6,550
Other variable-rate debt		697			1,901
Total variable-rate debt		6,206			8,451
Total consolidated	$	20,458		$	20,311
Weighted-average interest rate		5.45	%		5.16	%
Unconsolidated Real Estate Affiliates:
Fixed-rate debt	$	2,288		$	2,112
Variable-rate debt		692			723
Total Unconsolidated Real Estate Affiliates	$	2,980		$	2,835
Weighted-average interest rate		5.22	%		5.16	%

During the first six months of 2005, we obtained approximately $2.9 billion of consolidated debt through new financings and refinancings. Our share of debt issued by our Unconsolidated Real Estate Affiliates totaled approximately $300 million during the same period. Proceeds from the issuances were used, in part, to repay $2.2 billion of variable-rate debt. The new debt, substantially all of which is at fixed rates, bears interest at a weighted-average rate of approximately 5.05%.

During the quarter ended June 30, 2005, the rate on the four-year term loan portion of the 2004 Credit Facility (Note 4) was reduced by 25 basis points to LIBOR plus 200 basis points. The 2004 Credit Facility currently bears interest at a weighted-average rate of LIBOR plus approximately 216 basis points.

We intend to continue to reduce the percentage of variable-rate debt to total debt throughout 2005 and 2006 and to refinance the 2004 Credit Facility during the third quarter of 2006. Funds required for these repayments are expected to come primarily from the following:

• Refinancing low loan-to-value mortgages on existing properties

• Placing mortgages on currently unencumbered properties, including the Community Development segment

• Selective asset sales of office and industrial properties

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Although agreements to refinance debt maturing in 2005 and 2006 have not yet been reached, we currently anticipate that all of our debt will be repaid or refinanced on a timely basis. We believe that we have sufficient sources of funds to meet our cash needs and that covenants in the 2004 Credit Facility will not impact our liquidity or our ability to operate our business. However, there can be no assurance that we can obtain such financing on satisfactory terms. We will continue to monitor our capital structure, investigate potential investments or joint venture partnership arrangements and purchase additional properties if they can be acquired and financed on terms that we reasonably believe will enhance long-term stockholder value.

We have not guaranteed the debt of the Unconsolidated Real Estate Affiliates, however, certain Consolidated Properties are cross-collateralized with Unconsolidated Properties (Note 4) and we have retained or agreed to be responsible for a portion of certain debt of the Unconsolidated Real Estate Affiliates (Note 3).

During the current quarter, we also redeemed $183 million of perpetual preferred units, which represented substantially all of the preferred units which we were currently able to redeem.

On August 3, 2005, we announced that our Board of Directors authorized, effective immediately, a $200 million per fiscal year common stock repurchase program, subject to a current $125 million limit in our 2004 Credit Facility. Stock repurchases under this program will be made through open market or privately negotiated transactions through 2009, unless the program is earlier terminated. We have no obligation to repurchase any shares of common stock under the program, and the timing, actual number and value of shares to be purchased will depend on our stock price, market conditions and other factors. The repurchase program is designed to give us the option to acquire some or all of the shares of common stock to be issued upon the exercise of certain employee stock options, including over 900,000 options which are expected to vest in August, and pursuant to the CSA through 2009. The program will give us the flexibility to reduce or eliminate the share, earnings per share and funds from operations per share dilution caused by the issuance of these shares, or to issue new shares.

Contractual Obligations and Commitments

There have been no material changes in our contractual obligations and commitments in the six months ended June 30, 2005. Committed real estate acquisition contracts at both June 30, 2005 and December 31, 2004 include $250 million related to the Palazzo (Note 3) and $30 million related to a commitment to purchase Whaler’s Village, a shopping center on the island of Maui, Hawaii.

REIT STATUS

In order to remain qualified as a real estate investment trust (“REIT”) for federal income tax purposes, General Growth must distribute or pay tax on 100% of capital gains and at least 90% of its ordinary taxable income to stockholders. The following factors, among others, will affect operating cash flow and, accordingly, influence the decisions, as regularly re-examined as appropriate, of the Board of Directors regarding distributions:

• Scheduled increases in base rents of existing leases

• Changes in minimum base rents and/or overage rents attributable to replacement of existing leases with new or renewal leases

• Changes in occupancy rates at existing properties and procurement of leases for newly developed properties

• Necessary capital improvement expenditures or debt repayments at existing properties

• Our share of distributions of operating cash flow generated by the Unconsolidated Real Estate Affiliates, less oversight costs and debt service on additional loans that have been or will be incurred

• Anticipated proceeds from sales in our Community Development Segment.

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GENERAL GROWTH PROPERTIES, INC.

We anticipate that our operating cash flow, and potential new debt or equity from future offerings, new financings or refinancings will provide adequate liquidity to conduct our operations, fund general and administrative expenses, fund operating costs and interest payments and allow distributions to our preferred and common stockholders in accordance with the REIT requirements of the Internal Revenue Code.

SEASONALITY

Although we have a year-long temporary leasing program, a significant portion of the rents received from short-term tenants are collected during the months of November and December. In addition, the majority of our tenants have December or January lease years for purposes of calculating annual overage rent amounts. Accordingly, overage rent thresholds are most commonly achieved in the fourth quarter. As a result, occupancy levels and revenue production are generally highest in the fourth quarter of each year.

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 period. For example, significant estimates and assumptions have been made with respect to useful lives of assets, capitalization of development and leasing costs, recoverable amounts of receivables and deferred taxes, initial valuations and related amortization periods of deferred costs and intangibles, particularly with respect to property acquisitions. Actual results could differ from those estimates.

CRITICAL ACCOUNTING POLICIES

Critical accounting policies are those that are both significant to the overall presentation of our financial condition and results of operations and require management to make difficult, complex or subjective judgments. For example, significant estimates and assumptions have been made with respect to useful lives of assets, revenue recognition estimates in our Community Development Segment, capitalization of development and leasing costs, recoverable amounts of receivables and deferred taxes and initial valuations and related amortization periods of deferred costs and intangibles, particularly with respect to property acquisitions, as further discussed below. Our critical accounting policies as discussed in our Annual Report on Form 10-K for the year ended December 31, 2004 have not changed during the six months ended June 30, 2005.

ECONOMIC CONDITIONS

Changes in interest rates are the most significant economic condition which would impact our financial condition. Increases in interest rates, as have occurred in the first half of 2005, have and will continue to adversely impact us due to our outstanding variable-rate debt which has increased substantially due to the TRC Merger. We have limited our exposure to interest rate fluctuations related to a portion of our variable-rate debt by the use of interest rate cap and swap agreements. Subject to current market conditions, we have a policy of replacing variable-rate debt with fixed-rate debt. However, in an increasing interest rate environment (which generally follows improved market conditions), the fixed rates we can obtain with such replacement fixed-rate debt will also continue to increase.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

As described in Note 8, new accounting pronouncements have been issued which are effective for the current year. There has not been a significant impact on our financial statements due to the application of

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GENERAL GROWTH PROPERTIES, INC.

such new statements. There are no pronouncements or interpretations that have not yet been adopted that are expected to have a material effect on the consolidated financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to market risk associated with changes in interest rate both in terms of variable-rate debt and the price of new fixed-rate debt upon maturity of existing debt and for acquisitions. At June 30, 2005, we had consolidated debt of $20.5 billion, including $7.1 billion of variable-rate debt of which approximately $862.9 million is subject to interest rate swap agreements, which fix the interest we are required to pay on such debt to approximately 4.42% per annum. Although the majority of the remaining variable-rate debt is subject to interest rate cap agreements pursuant to the loan agreements and financing terms, such interest rate caps generally limit our interest rate exposure only if LIBOR exceeds an annual rate significantly higher (generally above 8%) than current LIBOR rates (3.34%). A 25 basis point movement in the interest rate on the $6.2 billion of variable-rate debt which is not subject to interest rate swap agreements would result in an annualized increase or decrease in consolidated interest expense and operating cash flows of approximately $15.5 million.

We are also subject to interest rate exposure as a result of the variable-rate debt collateralized by the Unconsolidated Real Estate Affiliates for which similar interest rate swap agreements have not been obtained. Our share (based on our respective equity ownership interests in the Unconsolidated Real Estate Affiliates) of such remaining variable-rate debt was approximately $692.2 million at June 30, 2005. A similar 25 basis point annualized movement in the interest rate on the variable-rate debt of the Unconsolidated Real Estate Affiliates would result in an annualized increase or decrease in our equity in the income and operating cash flows from Unconsolidated Real Estate Affiliates of approximately $1.7 million.

We are further subject to interest rate risk with respect to our fixed-rate financing in that changes in interest rates will impact the fair value of our fixed-rate financing. To determine fair market value, the fixed-rate debt is discounted at a rate based on an estimate of current lending rates, assuming the debt is outstanding through maturity and considering the debt’s collateral. At June 30, 2005, the fair value of our debt is estimated to be approximately $307.8 million higher than the carrying value of $20.5 billion. If LIBOR were to increase by 25 basis points, the fair value of the debt would be approximately $168.0 million higher than the carrying value and the fair value of our swap agreements would increase by approximately $2.1 million.

We have an ongoing program of refinancing our consolidated and unconsolidated variable- and fixed-rate debt and believe that this program allows us to vary our ratio of fixed to variable-rate debt and to stagger our debt maturities to respond to changing market rate conditions. Reference is made to the above discussions of Liquidity and Capital Resources and Note 4 for additional debt information.

We have not entered into any transactions using derivative commodity instruments.

ITEM 4. CONTROLS AND PROCEDURES

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report have been designed and are functioning effectively to provide reasonable assurance that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. We believe that a controls system, no matter how well designed and operated, cannot provide absolute

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GENERAL GROWTH PROPERTIES, INC.

assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Management is required to apply judgment in evaluating the cost-benefit relationship of possible controls and procedures.

There have been no changes in our internal controls over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are currently subject to litigation arising in the normal course of our business. In the opinion of management, none of these lawsuits or claims against us, either individually or in the aggregate, is likely to have a material adverse effect on our business, results of operations, or financial condition. In addition, we believe that we currently have adequate insurance in place to cover any such significant litigation.

ITEM 2. UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At the Company’s Annual Meeting of Stockholders held on May 4, 2005, the stockholders voted on the matters listed below. A total of 237,555,377 shares were eligible to vote on each matter presented at the Annual Meeting.

		Number of
	Matter	Shares For		Withheld
1.	(a) Election of Matthew
	Bucksbaum		206,763,076		9,559,989
	(b) Election of Bernard
	Freibaum		200,309,427		16,013,638
	(c) Election of Beth
	Stewart		194,936,827		21,386,238

John Bucksbaum, Robert A. Michaels, Thomas H. Nolan, John T. Riordan, Alan Cohen and Anthony Downs all continue as directors of the Company.

				Number of		Number of
		Number of		Shares		Shares
	Matter	Shares For		Against		Abstain
2.	Ratification of the selection of Deloitte & Touche LLP as the Company’s independent auditors for the year ending December 31, 2005		214,523,267		1,734,556		65,242

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GENERAL GROWTH PROPERTIES, INC.

				Number of		Number of
		Number of		Shares		Shares		Broker Non-
	Matter	Shares For		Against		Abstain		Votes
3.	Amendment of the Company’s 1998 Stock Incentive Plan to increase the number of shares of common stock available for issuance under the plan by 5,000,000 shares		170,399,431		27,217,143		743,526		17,962,965

				Number of		Number of
		Number of		Shares		Shares		Broker Non-
	Matter	Shares For		Against		Abstain		Votes
4	Change the vote required to elect a director from a plurality of the votes cast to a majority of the votes cast		89,149,331		108,476,611		734,158		17,962,965

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

10.1	General Growth Properties, Inc. 1998 Incentive Stock Plan, as amended.
10.2	Second Amendment, dated as of June 30, 2005 (the “Second Amendment”), to the Amended and Restated Credit Agreement, dated as of November 12, 2004, among General Growth Properties, Inc., GGP Limited Partnership and GGPLP L.L.C., as Borrowers, the Lenders parties thereto, Banc of America Securities LLC, Credit Suisse First Boston, Lehman Brothers Inc. and Wachovia Capital Markets, LLC, as joint advisors, joint arrangers and joint bookrunners, Bank of America, N.A. and Credit Suisse First Boston, as syndication agents, Eurohypo AG, New York Branch, as documentation agent, Lehman Commercial Paper Inc., as Tranche B administrative agent, and Wachovia Bank, National Association, as general administrative agent (the 2004 Credit Facility) (the Second Amendment was previously filed as Exhibit 10.3 to the Current Report on Form 8-K dated June 30, 2005 which was filed with the SEC on July 6, 2005).
10.3	Amendment No. 3, dated as of June 29, 2005, to the 2004 Credit Facility (previously filed as Exhibit 10.4 to the Current Report on Form 8-K dated June 30, 2005 which was filed with the SEC on July 6, 2005).
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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GENERAL GROWTH PROPERTIES, INC.

32.1	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1	Risk Factors

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	GENERAL GROWTH PROPERTIES, INC.
	(Registrant)
Date: August 8, 2005	by:	/s/: Bernard Freibaum
		Bernard Freibaum
		Executive Vice President and Chief Financial Officer
		(Principal Accounting Officer)

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EXHIBIT INDEX

10.1	General Growth Properties, Inc. 1998 Incentive Stock Plan, as amended.
10.2	Second Amendment, dated as of June 30, 2005 (the “Second Amendment”), to the Amended and Restated Credit Agreement, dated as of November 12, 2004, among General Growth Properties, Inc., GGP Limited Partnership and GGPLP L.L.C., as Borrowers, the Lenders parties thereto, Banc of America Securities LLC, Credit Suisse First Boston, Lehman Brothers Inc. and Wachovia Capital Markets, LLC, as joint advisors, joint arrangers and joint bookrunners, Bank of America, N.A. and Credit Suisse First Boston, as syndication agents, Eurohypo AG, New York Branch, as documentation agent, Lehman Commercial Paper Inc., as Tranche B administrative agent, and Wachovia Bank, National Association, as general administrative agent (the 2004 Credit Facility) (the Second Amendment was previously filed as Exhibit 10.3 to the Current Report on Form 8-K dated June 30, 2005 which was filed with the SEC on July 6, 2005).
10.3	Amendment No. 3, dated as of June 29, 2005, to the 2004 Credit Facility (previously filed as Exhibit 10.4 to the Current Report on Form 8-K dated June 30, 2005 which was filed with the SEC on July 6, 2005).
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1	Risk Factors

44 of 44

EX-10.1

Exhibit 10.1

GENERAL GROWTH PROPERTIES, INC.
1998 INCENTIVE STOCK PLAN, AS AMENDED

SECTION 1. Purpose; Definitions.

     The purpose of the Plan is to give the Company a significant advantage in attracting, retaining and motivating employees (other than Matthew Bucksbaum and John Bucksbaum) and to provide the Company, its Affiliates and Subsidiaries with the ability to provide competitive incentives which are directly linked to the profitability of the Company’s business and increases in stockholder value.

     For purposes of the Plan, the following terms are defined as set forth below:

     “Affiliate” means General Growth Management, Inc. and any other corporation or other entity controlled by the Company and designated by the Committee as such.

     “Award” means a Threshold-Vesting Stock Option.

     “Award Year” shall have the meaning set forth in the Cash Incentive Plan.

     “Board” means the Board of Directors of the Company.

     “Cash Incentive Plan” means the General Growth Properties, Inc. Cash Value Added Incentive Compensation Plan.

     “Cause” has the meaning set forth in Section 5(i).

     “Change in Control” and “Change in Control Price” have the meanings set forth in Sections 6(b) and (c) respectively.

     “Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto.

     “Commission” means the Securities and Exchange Commission or any successor agency.

     “Committee” means the Committee referred to in Section 2.

     “Common Stock” means common stock, par value $.10 per share, of the Company.

     “Company” means General Growth Properties, Inc., a Delaware corporation, and its successors and assigns.

     “Employer” means the Company and any Subsidiary or Affiliate whose employees are participants in the Plan.

     “Estimated Annual Growth Rate” means such rate as shall be established by the Committee on the date a Stock Option is granted.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and any successor thereto.

     “Fair Market Value” means, as of any given date, the mean between the highest and lowest reported sales prices of the Common Stock on the New York Stock Exchange Composite Tape or, if not then listed on such exchange, on any other national securities exchange on which the Common Stock is then listed or on

NASDAQ. If there is then no regular public trading market for such Common Stock, the Fair Market Value of the Common Stock shall be determined by the Committee in good faith.

     “Measurement Year” shall have the meaning set forth in the Cash Incentive Plan.

     “Non-Qualified Stock Option” means a Stock Option that is not an incentive stock option as defined by Section 422 of the Code.

     “Plan” means the General Growth Properties, Inc. 1998 Incentive Stock Plan, as set forth herein and as hereinafter amended from time to time.

     “Retirement” means retirement from active employment under a pension plan of the Company, any Subsidiary or Affiliate, or under an employment contract with any of them, or termination of employment at or after age 65 under circumstances which the Committee, in its sole discretion, deems equivalent to retirement.

     “Rule 16b-3” means Rule 16b-3, as promulgated by the Commission under Section 16(b) of the Exchange Act, as amended from time to time.

     “Subsidiary” means any corporation, partnership or other entity of which the Company or any Subsidiary owns, directly or indirectly, a majority of the voting power of the voting equity securities or a majority of the equity interest and shall not be deemed to be a “subsidiary” for any other purpose.

     “Termination of Employment” means the termination of the participant’s employment with the Company or any Subsidiary or Affiliate. A participant employed by a Subsidiary or an Affiliate shall also be deemed to incur a Termination of Employment if the Subsidiary or Affiliate ceases to be such a Subsidiary or Affiliate, as the case may be, and the participant does not immediately thereafter become an employee of the Company or another Subsidiary or Affiliate.

     “Total Disability” means complete and permanent inability by reason of illness or accident to perform the duties of the occupation at which a Participant was employed by an Employer when such total disability commenced, all as determined by the Committee. All determinations as to the date and extent of total disability of any Participant shall be made by the Committee, upon the basis of such evidence, including independent medical reports and data, as the Committee deems necessary and desirable, and all such determinations of the Committee shall be final.

     “Threshold Price” means the Fair Market Value of a share of Common Stock multiplied by the Estimated Annual Growth Rate, compounded annually for a five-year period.

     “Threshold-Vesting Stock Option” or “Stock Option” means an option granted under Section 5.

     In addition, certain other terms used herein have definitions given to them in the first place in which they are used.

SECTION 2. Administration.

     The Plan shall be administered by the Compensation Committee of the Board or such other committee appointed by and serving at the pleasure of the Board (the “Committee”). If at any time no Committee shall be in office, the functions of the Committee specified in the Plan shall be exercised by the Board.

     The Committee shall have plenary authority to grant Awards pursuant to the terms of the Plan to participants in the Cash Incentive Plan designated by the Committee.

     Among other things, the Committee shall have the authority, subject to the terms of the Plan:

     (a) to select the participants in the Cash Incentive Plan to whom Awards under the Plan may from time to time be granted;

     (b) to determine the number of shares of Common Stock to be covered by each Award granted hereunder;

     (c) to determine the terms and conditions of any Award granted hereunder (including, but not limited to, subject to Section 5(a), the option price, any vesting restriction or limitation and any vesting acceleration or forfeiture waiver regarding any Award and the shares of Common Stock relating thereto, based on such factors as the Committee shall determine);

     (d) to modify, amend or adjust the terms and conditions of any Award, at any time or from time to time;

     (e) to determine to what extent and under what circumstances Common Stock and other amounts payable with respect to an Award shall be deferred; and

     (f) to determine under what circumstances a Stock Option may be settled in cash or Common Stock under Section 5(k).

     The Committee shall have the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it shall, from time to time, deem advisable, to interpret the terms and provisions of the Plan and any Award issued under the Plan (and any agreement relating thereto) and to otherwise supervise the administration of the Plan.

     The Committee may act with respect to the Plan only by a majority of its members then in office, except that the members thereof may (i) delegate to an officer of the Company the authority to make decisions pursuant to paragraphs (c), (f), (g), (h) and (i) of Section 5 (provided that no such delegation may be made that would cause Awards or other transactions under the Plan to cease to be exempt from Section 16(b) of the Exchange Act) and (ii) authorize any one or more of their number or any officer of the Company to execute and deliver documents on behalf of the Committee.

     Any determination made by the Committee or pursuant to delegated authority pursuant to the provisions of the Plan with respect to any Award shall be made in the sole discretion of the Committee or such delegate at the time of the grant of the Award or, unless in contravention of any express term of the Plan, at any time thereafter. All decisions made by the Committee or any appropriately delegated officer pursuant to the provisions of the Plan shall be final and binding on all persons, including the Company and Plan participants.

SECTION 3. Common Stock Subject to Plan.

     Subject to adjustment as provided herein, the total number of shares of Common Stock available for distribution pursuant to Awards under the Plan shall be 11,000,000 shares of Common Stock. Shares subject to an Award under the Plan may be authorized and unissued shares or may be treasury shares. If a Stock Option is forfeited, expires or becomes unexercisable without having been exercised in full, the unpurchased Shares which were subject thereto shall become available for future grant under the Plan (unless the Plan has terminated).

     In the event of any merger, reorganization, consolidation, recapitalization, stock dividend, stock split, extraordinary distribution with respect to the Common Stock or other change in corporate structure affecting the Common Stock, the Committee or Board may make such substitution or adjustments in the aggregate number and kind of shares reserved for issuance under the Plan, in the number, kind and option price of shares subject to outstanding Stock Options and/or such other substitution or adjustments in the consideration receivable upon exercise as it may determine to be appropriate in its sole discretion; provided, however, that the number of shares subject to any Award shall always be a whole number.

SECTION 4. Eligibility.

     Employees of the Company, its Subsidiaries and Affiliates who are responsible for or contribute to the management, growth and profitability of the business of the Company, its Subsidiaries and Affiliates and who are designated by the Committee are eligible to be granted Awards under the Plan.

SECTION 5. Threshold-Vesting Stock Options.

     The Committee shall have the authority each Award Year to grant any optionee Threshold-Vesting Stock Options after the Committee has determined the Annual Bonus Awards under the Cash Incentive Plan based on the financial results in the applicable Measurement Year. The number of Stock Options to be granted to an optionee will be based on the optionee’s Annual Bonus Award under the Cash Incentive Plan in the current Award Year and shall be determined as follows:

     Step One: the optionee’s Annual Bonus Award under the Cash Incentive Plan shall be multiplied by a percentage, not to exceed 25%, to be determined by the Committee;

     Step Two: the product obtained under Step One shall be divided by ten percent (10%) of the Fair Market Value of a share of Common Stock on the date of grant of the Stock Option.

     Any Stock Option granted under the Plan shall be in such form as the Committee may from time to time approve and shall constitute a Non-Qualified Stock Option. Stock Options shall be evidenced by option agreements, the terms and provisions of which may differ, to the extent permitted by the Plan. An option agreement shall indicate on its face that it is intended to be a Non-Qualified Stock Option. The grant of a Stock Option shall occur on the date the Committee by resolution selects an individual to be a participant in any grant of a Stock Option, determines the number of shares of Common Stock to be subject to such Stock Option to be granted to such individual and specifies the terms and provisions of the Stock Option. The Company shall notify a participant of any grant of a Stock Option, and a written option agreement or agreements shall be duly executed and delivered by the Company to the participant. Such agreement or agreements shall become effective upon execution by the participant.

     Stock Options granted under the Plan shall be subject to the following terms and conditions and shall contain such additional terms and conditions as the Committee shall deem desirable:

     (a) Option Price. The option price per share of Common Stock purchasable under a Stock Option shall be the Fair Market Value of the Common Stock subject to the Stock Option on the date of grant.

     (b) Option Term. The term of each Stock Option shall be established by the Committee and shall not exceed 10 years from the date the Stock Option is granted.

     (c) Exercisability. Threshold-Vesting Stock Options shall be exercisable only after the Stock Option has vested. Vesting in such Stock Options shall occur after the Fair Market Value of the Common Stock has achieved and sustained the Threshold Price for at least 20 consecutive trading days at any time during the five-year period following the date of grant of the Stock Option, or at such time and under such conditions as are determined by the Committee.

     (d) Method of Exercise. Subject to the provisions of this Section 5, Stock Options may be exercised, in whole or in part, at any time during the option term by giving written notice of exercise to the Company specifying the number of shares of Common Stock subject to the Stock Option to be purchased.

     The option price of Common Stock to be purchased upon exercise of any Stock Option shall be paid in full in cash (by certified or bank check or such other instrument as the Company may accept) or, if and to the extent set forth in the option agreement, may also be paid by one or more of the following: (i) in the form of unrestricted Common Stock already owned by the optionee based in any such instance on the Fair Market

Value of the Common Stock on the date the Stock Option is exercised; or (ii) by a combination thereof, in each case in the manner provided in the option agreement.

     In the discretion of the Committee, payment for any shares subject to a Stock Option may also be made by delivering a properly executed exercise notice to the Company, together with a copy of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds to pay the purchase price. To facilitate the foregoing, the Company may enter into agreements for coordinated procedures with one or more brokerage firms.

     No shares of Common Stock shall be issued until full payment therefor has been made. An optionee shall have all of the rights of a stockholder of the Company holding the Common Stock that is subject to such Stock Option (including, if applicable, the right to vote the shares and the right to receive dividends), when the optionee has given written notice of exercise, has paid in full for such shares and, if requested, has given the representation described in Section 9(a).

     (e) Non-transferability of Stock Options. No Stock Option shall be transferable by the optionee other than (i) by will or by the laws of descent and distribution or (ii) pursuant to a qualified domestic relations order (as defined in the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended, or the rules thereunder). All Stock Options shall be exercisable, during the optionee’s lifetime, only by the optionee or by the guardian or legal representative of the optionee or by an alternate payee pursuant to such qualified domestic relations order, it being understood that the terms “holder” and “optionee” include the guardian and legal representative of the optionee named in the option agreement and any person to whom an option is transferred by will or the laws of descent and distribution or pursuant to a qualified domestic relations order.

     (f) Termination by Death. If an optionee’s employment terminates by reason of death, any Stock Option held by such optionee may thereafter be exercised, to the extent then otherwise exercisable, for a period of one year (or such other period as the Committee may specify in the option agreement) from the date of such death or until the expiration of the stated term of such Stock Option, whichever period is the shorter.

     (g) Termination by Reason of Total Disability. If an optionee’s employment terminates by reason of Total Disability, any Stock Option held by such optionee may thereafter be exercised by the optionee, to the extent it was otherwise exercisable at the time of termination, for a period of three years (or such shorter period as the Committee may specify in the option agreement) from the date of such termination of employment or until the expiration of the stated term of such Stock Option, whichever period is the shorter; provided, however, that if the optionee dies within such three-year period (or such shorter period), any unexercised Stock Option held by such optionee shall, notwithstanding the expiration of such three-year (or such shorter) period, continue to be exercisable to the extent to which it was exercisable at the time of death for a period of one year from the date of such death or until the expiration of the stated term of such Stock Option, whichever period is the shorter.

     (h) Termination by Reason of Retirement. If an optionee’s employment terminates by reason of Retirement, any Stock Option held by such optionee may thereafter be exercised by the optionee, to the extent it was exercisable at the time of such Retirement or on such accelerated basis as the Committee may determine, for a period of three years (or such shorter period as the Committee may specify in the option agreement) from the date of such termination of employment or until the expiration of the stated term of the Stock Option, whichever period is the shorter; provided, however, that if the optionee dies within such three-year (or such shorter) period, any unexercised Stock Option held by such optionee shall, notwithstanding the expiration of such three-year (or such shorter) period, continue to be exercisable to the extent to which it was exercisable at the time of death for a period of one year from the date of such death or until the expiration of the stated term of such Stock Option, whichever period is the shorter.

     (i) Other Termination. Unless otherwise determined by the Committee, if there occurs a Termination of Employment for any reason other than death, Total Disability, Retirement or Cause, any Stock Option held by such Optionee shall thereupon terminate, except that such Stock Option, to the extent then exercisable, or on such accelerated basis as the Committee may determine, may, if such Termination of

Employment is without Cause, be exercised for one year from the date of such Termination of Employment or the balance of such Stock Option’s term; provided, however, that if the optionee dies within such one-year period, any unexercised Stock Option held by such optionee shall notwithstanding the expiration of such one-year period, continue to be exercisable to the extent to which it was exercisable at the time of death for a period of one year from the date of such death or until the expiration of the stated term of such Stock Option, whichever period is the shorter. In the event of Termination of Employment for Cause, any unexercised Stock Option held by such optionee shall expire immediately upon the giving to the optionee of notice of such Termination of Employment. Unless otherwise determined by the Committee, for the purposes of the Plan, “Cause” shall mean (i) the conviction of the optionee for committing a felony under Federal law or the law of the state in which such action occurred, (ii) dishonesty in the course of fulfilling the optionee’s employment duties or (iii) willful and deliberate failure on the part of the optionee to perform his employment duties in any material respect.

     (j) Forfeitability and Termination. If a Threshold-Vesting Stock Option does not vest during the five-year period following the date of grant of the Stock Option, the Stock Option shall be forfeited and the Shares covered by such Option shall revert to the Plan. If an optionee does not exercise his Stock Option within the time period specified in the Plan, the Stock Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

     (k) Cashing Out of Stock Option. On receipt of written notice of exercise, the Committee may elect to cash out all or any part of the shares of Common Stock for which a Stock Option is being exercised by paying the optionee an amount, in cash or Common Stock, equal to the excess of the Fair Market Value of the Common Stock over the option price times the number of shares of Common Stock for which the Stock Option is being exercised on the effective date of such cash out.

     (l) Change in Control Cash Out. Notwithstanding any other provision of the Plan, during the 60-day period from and after a Change in Control (the “Exercise Period”), unless the Committee shall determine otherwise at the time of grant, an optionee shall have the right, whether or not the Stock Option is fully exercisable and in lieu of the payment of the exercise price for the shares of Common Stock being purchased under the Stock Option and by giving notice to the Company, to elect (within the Exercise Period) to surrender all or part of the Stock Option to the Company and to receive cash, within 30 days of such notice, in an amount equal to the amount by which the Change in Control Price per share of Common Stock on the date of such election shall exceed the exercise price per share of Common Stock under the Stock Option (the “Spread”) multiplied by the number of shares of Common Stock granted under the Stock Option as to which the right granted under this Section 5(l) shall have been exercised; provided, however, that if the Change in Control is within six months of the date of grant of a particular Stock Option held by an optionee who is an officer or director of the Company and is subject to Section 16(b) of the Exchange Act no such election shall be made by such optionee with respect to such Stock Option prior to six months from the date of grant. Notwithstanding any other provision hereof, if the end of such 60-day period from and after a Change in Control is within six months of the date of grant of a Stock Option held by an optionee who is an officer or director of the Company and is subject to Section 16(b) of the Exchange Act, such Stock Option shall be cancelled in exchange for a cash payment to the optionee, effected on the day which is six months and one day after the date of grant of such Option, equal to the Spread multiplied by the number of shares of Common Stock granted under the Stock Option.

SECTION 6. Change in Control Provisions.

     (a) Impact of Event. Notwithstanding any other provision of the Plan to the contrary, in the event of a Change in Control any Stock Options outstanding as of the date such Change in Control is determined to have occurred and not then exercisable and vested shall become fully exercisable and vested to the full extent of the original grant.

     (b) Definition of Change in Control. For purposes of the Plan, a “Change in Control” shall mean the happening of any of the following events:

     (i) An acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (1) the then outstanding shares of common stock of the Company (the “Outstanding Common Stock”) or (2) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Voting Securities”); excluding, however, the following: (1) any acquisition directly from the Company, other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company, (2) any acquisition by the Company, or members of the Company’s management, or any combination thereof, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (4) any acquisition by any Person pursuant to a transaction which complies with clauses (1), (2) and (3) of subsection (iii) of this Section 6(b); or

     (ii) A change in the composition of the Board such that the individuals who, as of the effective date of the Plan, constitute the Board (such Board shall be hereinafter referred to as the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, for purposes of this Section 6(b), that any individual who becomes a member of the Board subsequent to such effective date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of those individuals who are members of the Board and who were also members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such individual were a member of the Incumbent Board; but, provided further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be so considered as a member of the Incumbent Board; or

     (iii) The approval by the shareholders of the Company of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (“Corporate Transaction”); excluding, however, such a Corporate Transaction pursuant to which (1) all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the Outstanding Common Stock and Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 60% of, respectively, the outstanding shares of common stock, and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more Subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Common Stock and Outstanding Voting Securities, as the case may be, (2) no Person (other than the Company, any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or such corporation resulting from such Corporate Transaction) will beneficially own, directly or indirectly, 20% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding voting securities of such corporation entitled to vote generally in the election of directors except to the extent that such ownership existed with respect to the Company prior to the Corporate Transaction and (3) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction; or

     (iv) The approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

     (c) Change in Control Price. For purposes of the Plan, “Change in Control Price” means the higher of (i) the highest reported sales price, regular way, of a share of Common Stock in any transaction reported on the New York Stock Exchange Composite Tape or other national securities exchange on which such shares are listed or on NASDAQ, as applicable, during the 60-day period prior to and including the date of a Change in Control and (ii) if the Change in Control is the result of a tender or exchange offer or a Corporate Transaction, the highest price per share of Common Stock paid in such tender or exchange offer or

Corporate Transaction; provided, however, that in the case of a Stock Option which (x) is held by an optionee who is an officer or director of the Company and is subject to Section 16(b) of the Exchange Act and (y) was granted within 240 days of the Change in Control, then the Change in Control Price for such Stock Option shall be the Fair Market Value of the Common Stock on the date such Stock Option is exercised or cancelled. To the extent that the consideration paid in any such transaction described above consists all or in part of securities or other non-cash consideration, the value of such securities or other non-cash consideration shall be determined in the sole discretion of the Board.

SECTION 7. Term, Amendment and Termination.

     The Plan will terminate on December 31, 2008. Under the Plan, Awards outstanding as of December 31, 2008 shall not be affected or impaired by the termination of the Plan.

     The Board may amend, alter, or discontinue the Plan, including, without limitation, to provide for the transferability of any or all Stock Option(s) in the event the instructions to Form S-8 promulgated pursuant to the Securities Act of 1933, as amended, or any successor form, are hereafter amended to permit registration of shares issuable upon the exercise of options such as the Stock Options which are transferable, but no amendment, alteration or discontinuation shall be made which would impair the rights of an optionee under a Stock Option theretofore granted without the optionee’s consent. In addition, no such amendment shall be made without the approval of the Company’s stockholders to the extent such approval is required by law or agreement.

     The Committee may amend the terms of any Stock Option theretofore granted, prospectively or retroactively, including, without limitation, to provide for the transferability of such Stock Option in the event the instructions to Form S-8 promulgated pursuant to the Securities Act of 1933, as amended, or any successor form, are hereafter amended to permit registration of shares issuable upon the exercise of options such as the Stock Options which are transferable, but no such amendment shall impair the rights of any holder without the holder’s consent except such an amendment made to cause the Option to qualify for the exemption provided by Rule 16b-3(d). Notwithstanding anything herein to the contrary, without the prior approval of the Company’s shareholders, Stock Options issued under the Plan will not be repriced, replaced, or regranted through cancellation, or by lowering the exercise price of a previously granted Stock Option.

     Subject to the above provisions, the Board shall have authority to amend the Plan to take into account changes in law and tax and accounting rules, as well as other developments and to grant Awards which qualify for beneficial treatment under such rules without stockholder approval.

SECTION 8. Unfunded Status of Plan.

     It is presently intended that the Plan constitute an “unfunded” plan for incentive and deferred compensation. The Committee may authorize the creation of trusts or other arrangements to meet the obligations created under the Plan to deliver Common Stock or make payments; provided, however, that, unless the Committee otherwise determines, the existence of such trusts or other arrangements is consistent with the “unfunded” status of the Plan.

SECTION 9. General Provisions.

     (a) The Committee may require each person purchasing or receiving shares pursuant to an Award to represent to and agree with the Company in writing that such person is acquiring the shares without a view to the distribution thereof. The certificates for such shares may include any legend which the Committee deems appropriate to reflect any restrictions on transfer.

     All certificates for shares of Common Stock or other securities delivered under the Plan shall be subject to such stock transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Commission, any stock exchange upon which the Common Stock is then listed and any applicable Federal or state securities law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

     (b) Nothing contained in the Plan shall prevent the Company or any Subsidiary or Affiliate from adopting other or additional compensation arrangements for its employees.

     (c) The adoption of the Plan shall not confer upon any employee any right to continued employment nor shall it interfere in any way with the right of the Company or any Subsidiary or Affiliate to terminate the employment of any employee at any time.

     (d) No later than the date as of which an amount first becomes includible in the gross income of the participant for Federal income tax purposes with respect to any Award under the Plan, the participant shall pay to the Company, or make arrangements satisfactory to the Company regarding the payment of, any Federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such amount. Unless otherwise determined by the Committee, withholding obligations may be settled with Common Stock, including Common Stock that is part of the Award that gives rise to the withholding requirement. The obligations of the Company under the Plan shall be conditional on such payment or arrangements, and the Company, its Subsidiaries and its Affiliates shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to the participant. The Committee may establish such procedures as it deems appropriate, including the making of irrevocable elections, for the settlement of withholding obligations with Common Stock.

     (e) At the time of grant, the Committee may provide in connection with any grant made under the Plan that the shares of Common Stock received upon exercise of such Option shall be subject to a right of first refusal pursuant to which the participant shall be required to offer to the Company any shares that the participant wishes to sell at the then Fair Market Value of the Common Stock, subject to such other terms and conditions as the Committee may specify at the time of grant.

     (f) The Committee shall establish such procedures as it deems appropriate for a participant to designate a beneficiary to whom any amounts payable in the event of the participant’s death are to be paid.

     (g) The Plan and all Awards made and actions taken thereunder shall be governed by and construed in accordance with the laws of the State of Delaware.

SECTION 10. Effective Date of Plan.

     The Plan shall be effective on the later of (a) the date it is approved by the stockholders of the Company and (b) the date, if any, specified by the Board at the time it is approved by the Board.

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002

I, John Bucksbaum, certify that:

1. I have reviewed this quarterly report on Form 10-Q of General Growth Properties, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2005	/s/:John Bucksbaum
	John Bucksbaum
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002

I, Bernard Freibaum, certify that:

1. I have reviewed this quarterly report on Form 10-Q of General Growth Properties, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2005	/s/: Bernard Freibaum
	Bernard Freibaum
	Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of General Growth Properties, Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John Bucksbaum, in my capacity as Chief Executive Officer of the Company, do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/: John Bucksbaum

John Bucksbaum

August 8, 2005

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of General Growth Properties, Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Bernard Freibaum, in my capacity as Chief Financial Officer of the Company, do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/: Bernard Freibaum

Bernard Freibaum

Chief Financial Officer

August 8, 2005

EX-99.1

Exhibit 99.1

RISK FACTORS

RISKS RELATED TO REAL ESTATE INVESTMENTS

We invest primarily in regional mall shopping centers and other retail properties, which are subject to a number of significant risks which are beyond our control

Real property investments are subject to varying degrees of risk that may affect the ability of our retail properties to generate sufficient revenues. A number of factors may decrease the income generated by a retail property, including:

• the regional and local economy, which may be negatively impacted by plant closings, industry slowdowns, adverse weather conditions, natural disasters and other factors;

• local real estate conditions, such as an oversupply of, or a reduction in demand for, retail space or retail goods, and the availability and creditworthiness of current and prospective tenants;

• perceptions by retailers or shoppers of the safety, convenience and attractiveness of the retail property;

• the convenience and quality of competing retail properties and other retailing options such as the Internet;

• changes in laws and regulations applicable to real property, including tax and zoning laws; and

• changes in interest rate levels and the availability and cost of financing.

If we are unable to generate sufficient revenue from our retail properties, including those held by joint ventures, we will be unable to meet operating and other expenses, including debt service, lease payments, capital expenditures and tenant improvements, and to make distributions from our joint ventures and then, in turn, to our stockholders.

We depend on leasing space to tenants on economically favorable terms and collecting rent from these tenants, who may not be able to pay

Our results of operations will depend on our ability to continue to lease space in our properties on economically favorable terms. If the sales of stores operating in our centers decline sufficiently, tenants might be unable to pay their existing minimum rents or expense recovery charges, since these rents and charges would represent a higher percentage of their sales. If our tenants’ sales decline, new tenants would be less likely to be willing to pay minimum rents as high as they would otherwise pay. In addition, as substantially all of our income is derived from rentals of real property, our income and cash available for distribution to our stockholders would be adversely affected if a significant number of tenants were unable to meet their obligations to us. During times of economic recession, these risks will increase.

Bankruptcy or store closures of tenants may decrease our revenues and available cash

A number of companies in the retail industry, including some of our tenants, have declared bankruptcy or voluntarily closed certain of their stores in recent years. The bankruptcy or closure of a major tenant, particularly an Anchor tenant, may have a material adverse effect on the retail properties affected and the income produced by these properties and may make it substantially more difficult to lease the remainder of the affected retail properties. Our leases generally do not contain provisions designed to ensure the creditworthiness of the tenant. As a result, the bankruptcy or closure of a major tenant could result in a lower level of cash available for distribution to our stockholders.

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We may be negatively impacted by department store consolidations

Department store consolidations, such as K-Mart’s acquisition of Sears and Federated’s pending acquisition of May Department Stores may result in the closure of existing department stores and we may be unable to re-lease this area or to re-lease it on comparable or more favorable terms. Other tenants may be entitled to modify the terms of their existing leases in the event of such closures. Additionally, department store closures could result in decreased customer traffic which could lead to decreased sales at other stores. Rents obtained from other tenants may also be adversely impacted. Consolidations may also negatively affect current and future development and redevelopment projects

It may be difficult to buy and sell real estate quickly, and transfer restrictions apply to some of our mortgaged properties

Equity real estate investments are relatively illiquid, and this characteristic tends to limit our ability to vary our portfolio promptly in response to changes in economic or other conditions. In addition, significant expenditures associated with each equity investment, such as mortgage payments, real estate taxes and maintenance costs, are generally not reduced when circumstances cause a reduction in income from the investment. If income from a property declines while the related expenses do not decline, our income and cash available for distribution to our stockholders would be adversely affected. A significant portion of our properties are mortgaged to secure payment of indebtedness, and if we were unable to meet our mortgage payments, we could lose money as a result of foreclosure on the properties by the various mortgagees. In addition, if it becomes necessary or desirable for us to dispose of one or more of the mortgaged properties, we might not be able to obtain a release of the lien on the mortgaged property without payment of the associated debt. The foreclosure of a mortgage on a property or inability to sell a property could adversely affect the level of cash available for distribution to our stockholders. If persons selling properties to us wish to defer the payment of taxes on the sales proceeds, we are likely to pay them in units of limited partnership interest in the Operating Partnership. In transactions of this kind, we may also agree, subject to certain exceptions, not to sell the acquired properties for significant periods of time.

RISKS RELATED TO OUR BUSINESS

We may develop or expand new properties, and this activity is subject to various risks

We intend to continue to pursue development and expansion activities as opportunities arise. In connection with any development or expansion, we will be subject to various risks, including the following:

• we may abandon development or expansion activities;

• construction costs of a project may exceed original estimates or available financing, possibly making the project unfeasible or unprofitable;

• we may not be able to obtain financing or to refinance construction loans, which generally have full recourse to us;

• we may not be able to obtain zoning, occupancy or other required governmental permits and authorizations;

• occupancy rates and rents at a completed project may not meet projections and, therefore, the project may not be profitable; and

• we may need Anchor, mortgage lender and property partner approvals, if applicable, for expansion or redevelopment activities.

If a development project is unsuccessful, our loss could exceed our investment in the project.

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If we are unable to manage our growth effectively, our financial condition and results of operations may be adversely affected

We have experienced rapid growth in recent years, increasing our total consolidated assets from approximately $1.8 billion at December 31, 1996 to approximately $25.4 billion at June 30, 2005. We may continue this rapid growth for the foreseeable future by acquiring or developing properties when we believe that market circumstances and investment opportunities are attractive. We may not, however, be able to manage our growth effectively or to maintain a similar rate of growth in the future, and the failure to do so may have a material adverse effect on our financial condition and results of operations.

We may incur costs to comply with environmental laws

Under various federal, state or local laws, ordinances and regulations, a current or previous owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances released at a property, and may be held liable to a governmental entity or to third parties for property damage or personal injuries and for investigation and clean-up costs incurred by the parties in connection with the contamination. These laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release of the hazardous or toxic substances. The presence of contamination or the failure to remediate contamination may adversely affect the owner’s ability to sell or lease real estate or to borrow using the real estate as collateral. Other federal, state and local laws, ordinances and regulations require abatement or removal of asbestos-containing materials in the event of demolition or some renovations or remodeling and also govern emissions of and exposure to asbestos fibers in the air. Federal and state laws also regulate the operation and removal of underground storage tanks. In connection with the ownership, operation and management of our properties, we could be held liable for the costs of remedial action with respect to these regulated substances or tanks or related claims.

Each of our properties has been subjected to varying degrees of environmental assessment at various times. However, the identification of new areas of contamination, a change in the extent or known scope of contamination or changes in cleanup requirements could result in significant costs to us.

We are in a competitive business

There are numerous shopping facilities that compete with our properties in attracting retailers to lease space. In addition, retailers at our properties face continued competition from discount shopping centers, lifestyle centers, outlet malls, wholesale and discount shopping clubs, direct mail, telemarketing, television shopping networks and shopping via the Internet. Competition of this type could adversely affect our revenues and cash available for distribution to our stockholders.

We compete with other major real estate investors with significant capital for attractive investment opportunities. These competitors include other REITs, investment banking firms and private institutional investors. This competition has increased prices for commercial properties and may impair our ability to make suitable property acquisitions on favorable terms in the future.

We may not be able to obtain capital to make investments

We depend primarily on external financing to fund the growth of our business. This is because one of the requirements of the Internal Revenue Code of 1986, as amended, which we refer to as the “Code,” for a REIT generally is that it distributes 90% of its net taxable income, excluding net capital gains, to its stockholders. Our access to debt or equity financing depends on banks’ willingness to lend to us and on conditions in the capital markets in general. We and other companies in the real estate industry have experienced less favorable terms for bank loans and capital markets financing from time to time. Although we believe, based on current market conditions, that we will be able to finance investments we

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wish to make in the foreseeable future, financing might not be available on acceptable terms or may be affected by the amount of debt we have outstanding as a result of the TRC Merger.

Some of our potential losses may not be covered by insurance

We carry comprehensive liability, fire, flood, earthquake, terrorism, extended coverage and rental loss insurance on all of our properties. We believe the policy specifications and insured limits of these policies are adequate and appropriate. There are, however, some types of losses, including lease and other contract claims, that generally are not insured. If an uninsured loss or a loss in excess of insured limits occurs, we could lose all or a portion of the capital we have invested in a property, as well as the anticipated future revenue from the property. If this happens, we might nevertheless remain obligated for any mortgage debt or other financial obligations related to the property.

If the Terrorism Risk Insurance Act is not extended beyond 2005, we may incur higher insurance costs and greater difficulty in obtaining insurance which covers terrorist-related damages. Our tenants may also experience similar difficulties.

We are subject to risks that affect the general retail environment

Our concentration in the regional mall market means that we are subject to factors that affect the retail environment generally, including the level of consumer spending, the willingness of retailers to lease space in our shopping centers, department store consolidations and tenant bankruptcies. In addition, we are exposed to the risk that terrorist activities, or the threat of such activities, may discourage consumers from visiting our malls and impact consumer confidence.

Inflation may adversely affect our financial condition and results of operations

Should inflation increase in the future, we may experience any or all of the following:

• decreasing tenant sales as a result of decreased consumer spending which could result in lower percentage rents;

• difficulty in replacing or renewing expiring leases with new leases at higher base and/or percentage rents; and

• an inability to receive reimbursement from our tenants for their share of certain operating expenses, including common area maintenance, real estate taxes and insurance.

Inflation also poses a potential threat to us due to the probability of future increases in interest rates. Such increases would adversely impact us due to our outstanding variable-rate debt as well as result in higher interest rates on new fixed-rate debt.

RISKS RELATED TO OUR ORGANIZATIONAL AND FINANCIAL STRUCTURE THAT GIVE RISE TO OPERATIONAL AND FINANCIAL RISKS

Our substantial indebtedness could adversely affect our financial health and operating flexibility

We have a substantial amount of indebtedness. As of June 30, 2005, we had an aggregate consolidated indebtedness outstanding of approximately $20.5 billion, approximately $13.3 billion of which was secured by our properties. A majority of the secured indebtedness was non-recourse to us, while approximately $7.2 billion of our aggregate indebtedness was unsecured, recourse indebtedness of the Operating Partnership and consolidated subsidiaries. This indebtedness does not include our proportionate share of indebtedness incurred by our joint ventures. As a result of this substantial indebtedness, we are required to use a material portion of our cash flow to service principal and interest on our debt, which will limit the cash flow available for other desirable business opportunities.

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Our substantial indebtedness could have important consequences to us and the value of our common stock including:

• limiting our ability to borrow additional amounts for working capital, capital expenditures, debt service requirements, execution of our growth strategy or other purposes;

• limiting our ability to use operating cash flow in other areas of our business because we must dedicate a substantial portion of these funds to service the debt;

• increasing our vulnerability to general adverse economic and industry conditions;

• limiting our ability to capitalize on business opportunities, including the acquisition of additional properties, and to react to competitive pressures and adverse changes in government regulation;

• limiting our ability or increasing the costs to refinance indebtedness; and

• limiting our ability to enter into marketing and hedging transactions by reducing the number of counterparties with whom we can enter into such transactions as well as the volume of those transactions.

The terms of the 2004 Credit Facility obtained in conjunction with the TRC Merger contain covenants and events of default that may limit our flexibility and prevent us from taking certain actions or result in the acceleration of our obligations under the facility

The terms of the 2004 Credit Facility require us to satisfy certain customary affirmative and negative covenants and to meet financial ratios and tests including ratios and tests based on leverage, interest coverage and net worth. The covenants under our 2004 Credit Facility affect, among other things, our ability to:

• incur indebtedness;

• create liens on assets;

• sell assets;

• make capital expenditures; and

• engage in mergers and acquisitions.

Given the restrictions in our debt covenants on these and other activities, we may be restricted in our ability to pursue other acquisitions, may be significantly limited in our operating and financial flexibility and may be limited in our ability to respond to changes in our business or competitive activities.

A failure to comply with these covenants, including a failure to meet the financial tests or ratios, would likely result in an event of default under the 2004 Credit Facility and would allow the lenders to accelerate our debt under such facility. If our debt is accelerated, our assets may not be sufficient to repay such debt in full.

We share control of some of our properties with other investors and may have conflicts of interest with those investors

As of June 30, 2005, we had partial interests in retail and commercial properties (referred to in this Quarterly Report as the “Unconsolidated Properties.” We generally make all operating decisions for these properties, but we are required to make other decisions with the other investors who have interests in the relevant property or properties. For example, the approval of certain of the other investors is required with respect to operating budgets and refinancing, encumbering, expanding or selling any of these properties. We might not have the same interests as the other investors in relation to these transactions. Accordingly, we might not be able to favorably resolve any of these issues, or we might have to provide financial or other inducement to the other investors to obtain a favorable resolution.

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In addition, various restrictive provisions and rights apply to sales or transfers of interests in our jointly owned properties. These may work to our disadvantage because, among other things, we might be required to make decisions about buying or selling interests in a property or properties at a time that is disadvantageous to us or we might be required to purchase the interests of our partners in our jointly owned properties.

Bankruptcy of joint venture partners could impose delays and costs on us with respect to the jointly owned retail properties

The bankruptcy of one of the other investors in any of our jointly owned shopping centers could materially and adversely affect the relevant property or properties. Under the bankruptcy laws, we would be precluded by the automatic stay from taking some actions affecting the estate of the other investor without prior approval of the bankruptcy court, which would, in most cases, entail prior notice to other parties and a hearing in the bankruptcy court. At a minimum, the requirement to obtain court approval may delay the actions we would or might want to take. If the relevant joint venture through which we have invested in a property has incurred recourse obligations, the discharge in bankruptcy of one of the other investors might result in our ultimate liability for a greater portion of those obligations than we would otherwise bear.

Payments by our direct and indirect subsidiaries of dividends and distributions to us may be adversely affected by prior payments to these subsidiaries’ creditors and preferred security holders

Substantially all of our assets are owned through our general partnership interest in the Operating Partnership, including TRCLP. The Operating Partnership holds substantially all of its properties and assets through subsidiaries, including subsidiary partnerships, limited liability companies and corporations that have elected to be taxed as REITs. The Operating Partnership therefore derives substantially all of its cash flow from cash distributions to it by its subsidiaries, and we, in turn, derive substantially all of our cash flow from cash distributions to us by the Operating Partnership. The creditors and preferred security holders, if any, of each of our direct and indirect subsidiaries are entitled to payment of that subsidiary’s obligations to them, when due and payable, before that subsidiary may make distributions to us. Thus, the Operating Partnership’s ability to make distributions to its partners, including us, depends on its subsidiaries’ ability first to satisfy their obligations to their creditors and preferred security holders, if any, and then to make distributions to the Operating Partnership. Similarly, our ability to pay dividends to holders of our common stock depends on the Operating Partnership’s ability first to satisfy its obligations to its creditors and preferred security holders, if any, and then to make distributions to us.

In addition, we will have the right to participate in any distribution of the assets of any of our direct or indirect subsidiaries upon the liquidation, reorganization or insolvency of the subsidiary only after the claims of the creditors, including trade creditors, and preferred security holders, if any, of the subsidiary are satisfied. Our common stockholders, in turn, will have the right to participate in any distribution of our assets upon the liquidation, reorganization or insolvency of us only after the claims of our creditors, including trade creditors, and preferred security holders, if any, are satisfied.

We might fail to qualify or remain qualified as a REIT

Although we believe that we will remain structured and will continue to operate so as to qualify as a REIT for federal income tax purposes, we might not continue to be so qualified. Qualification as a REIT for federal income tax purposes involves the application of highly technical and complex provisions of the Code for which there are only limited judicial or administrative interpretations. Therefore, the determination of various factual matters and circumstances not entirely within our control may impact our ability to qualify as a REIT. In addition, legislation, new regulations, administrative interpretations or

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court decisions might significantly change the tax laws with respect to the requirements for qualification as a REIT or the federal income tax consequences of qualification as a REIT.

If, with respect to any taxable year, we fail to maintain our qualification as a REIT, we would not be allowed to deduct distributions to stockholders in computing our taxable income and federal income tax. The corporate level income tax, including any applicable alternative minimum tax, would apply to our taxable income at regular corporate rates. As a result, the amount available for distribution to stockholders would be reduced for the year or years involved, and we would no longer be required to make distributions. In addition, unless we were entitled to relief under the relevant statutory provisions, we would be disqualified from treatment as a REIT for the taxable years following the year during which qualification was lost. Notwithstanding that we currently intend to operate in a manner designed to allow us to qualify as a REIT, future economic, market, legal, tax or other considerations may cause us to determine that it is in our best interest and the best interest of our stockholders to revoke the REIT election.

An ownership limit and certain anti-takeover defenses and applicable law may hinder any attempt to acquire us

The Ownership Limit. Generally, for us to maintain our qualification as a REIT under the Code, not more than 50% in value of the outstanding shares of our capital stock may be owned, directly or indirectly, by five or fewer individuals at any time during the last half of our taxable year. The Code defines “individuals” for purposes of the requirement described in the preceding sentence to include some types of entities. In general, under our Second Amended and Restated Certificate of Incorporation, as amended (our “Certificate”), no person other than Martin Bucksbaum (deceased), Matthew Bucksbaum (the Chairman of our Board of Directors), their families and related trusts and entities, including M.B. Capital Partners III, may own more than 7.5% of the value of our outstanding capital stock. However, our Certificate also permits our company to exempt a person from the 7.5% ownership limit upon the satisfaction of certain conditions which are described in our Certificate.

Selected Provisions of our Charter Documents. Our board of directors is divided into three classes of directors. Directors of each class are chosen for three-year staggered terms. Staggered terms of directors may reduce the possibility of a tender offer or an attempt to change control of our company, even though a tender offer or change in control might be in the best interest of our stockholders. Our charter authorizes the board of directors:

• to cause us to issue additional authorized but unissued shares of common stock or preferred stock;

• to classify or reclassify, in one or more series, any unissued preferred stock; and

• to set the preferences, rights and other terms of any classified or reclassified stock that we issue.

Stockholder Rights Plan. We have a stockholder rights plan which will impact a potential acquirer unless the acquirer negotiates with our board of directors and the board of directors approves the transaction.

Selected Provisions of Delaware Law. We are a Delaware corporation, and Section 203 of the Delaware General Corporation Law applies to us. In general, Section 203 prevents an “interested stockholder,” as defined in the next sentence, from engaging in a “business combination,” as defined in

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the statute, with us for three years following the date that person becomes an interested stockholder unless:

• before that person became an interested stockholder, our board of directors approved the transaction in which the interested stockholder became an interested stockholder or approved the business combination;

• upon completion of the transaction that resulted in the interested stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) stock held by directors who are also officers of the company and by employee stock plans that do not provide employees with the right to determine confidentially whether shares held under the plan will be tendered in a tender or exchange offer; or

• following the transaction in which that person became an interested stockholder, the business combination is approved by our board of directors and authorized at a meeting of stockholders by the affirmative vote of the holders of at least two-thirds of our outstanding voting stock not owned by the interested stockholder.

The statute defines “interested stockholder” to mean generally any person that is the owner of 15% or more of our outstanding voting stock or is an affiliate or associate of us and was the owner of 15% or more of our outstanding voting stock at any time within the three-year period immediately before the date of determination.

Each item discussed above may delay, deter or prevent a change in control of our company, even if a proposed transaction is at a premium over the then current market price for our common stock. Further, these provisions may apply in instances where some stockholders consider a transaction beneficial to them. As a result, our stock price may be negatively affected by these provisions.

We have partners who have tax protection arrangements and other tax-related obligations to certain partners

We own properties through partnerships which have arrangements in place that protect the deferred tax situation of our existing third party limited partners. Violation of these arrangements could impose costs on us. As a result, we may be restricted with respect to decisions such as financing, encumbering, expanding or selling these properties.

Several of our joint venture partners are tax-exempt. As such, they are taxable to the extent of their share of unrelated business taxable income generated from these properties. As the managing partner in these joint ventures, we have obligations to avoid the creation of unrelated business taxable income at these properties. As a result, we may be restricted with respect to decisions such as financing and revenue generation with respect to these properties.

RISKS RELATED TO THE TRC MERGER

We may be unable to integrate the operations of TRCLP successfully and may not realize the full anticipated benefits of the TRC Merger

Achieving the anticipated benefits of the TRC Merger will depend in part upon our ability to integrate the two companies’ businesses in an efficient and effective manner. Our attempt to integrate two companies that have previously operated independently may result in significant challenges, and we may be unable to accomplish the integration smoothly or successfully. In particular, the necessity of coordinating geographically dispersed organizations and addressing possible differences in corporate cultures and management philosophies may increase the difficulties of integration. The integration will continue to require the dedication of significant management resources, which may temporarily distract management’s attention from the day-to-day operations of the businesses of the combined company. The

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process of integrating operations may cause further interruption of, or loss of momentum in, the activities of one or more of the combined company’s businesses and the further loss of key personnel. In, addition, we may face difficulties integrating aspects of the combined company’s businesses that we have not historically focused on, such as the community development business. Any inability of management to integrate the operations of TRCLP successfully could cause us to not fully achieve the expected benefits of the TRC Merger.

Limitations on the sale of the TRCLP assets may affect our cash flow

We may be restricted in our ability to dispose of certain TRCLP assets until the ten-year period after TRC’s election of REIT status expires in 2008 due to the potential incurrence of substantial tax liabilities on such dispositions due to applicable REIT regulations.

Representatives of the holders of interests of a Contingent Stock Agreement (the “CSA”) have asserted that the TRC Merger is a prohibited transaction

We have assumed the obligations of TRC under the CSA. The assumption includes the obligation under the CSA to issue shares of common stock twice a year to the beneficiaries under the CSA. The number of shares is based upon our stock price and upon a formula set forth in the CSA. Such issuances could be dilutive to our existing stockholders if we are unable to repurchase a corresponding number of shares through our publicly announced stock repurchase program. Notwithstanding our assumption of the CSA, there is an on-going dispute with the beneficiaries, who are taking the position that the TRC Merger violates certain portions of the CSA in that the TRC Merger is a “prohibited transaction” because the TRC Merger, among other things, had a prejudicial effect on the beneficiaries with respect to their non-taxable receipt of securities under the CSA. We have provided the beneficiaries with certain indemnification rights relating to this issue. We also believe that all applicable requirements of the CSA have been satisfied in connection with the TRC Merger and, therefore, the TRC Merger does not constitute a “prohibited transaction.” However, we might not be able to favorably resolve these issues.

RISKS RELATED TO OUR COMMON STOCK

Our common stock price may be volatile, and consequently investors may not be able to resell their common stock at or above their purchase price

The price at which our common stock will trade may be volatile and may fluctuate due to factors such as:

• our historical and anticipated quarterly and annual operating results;

• variations between our actual results and analyst and investor expectations or changes in financial estimates and recommendations by securities analysts;

• the performance and prospects of our industry;

• the depth and liquidity of the market for our common stock;

• investor perception of us and the industry in which we operate;

• domestic and international economic conditions;

• the extent of institutional investor interest in us;

• the reputation of REITs generally and the attractiveness of their equity securities in comparison to other equity securities, including securities issued by other real estate companies, and fixed income securities;

• our financial condition and performance; and

• general market conditions and trends.

Fluctuations may be unrelated to or disproportionate to our financial performance. These fluctuations may result in a material decline in the trading price of our common stock.

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Future sales of our common stock may depress our stock price

As of June 30, 2005, approximately 62.8 million shares of common stock were reserved for issuance upon exercise of conversion and/or redemption rights as to units of limited partnership interest in the operating partnership. Under our shelf registration statement, we may offer from time to time up to $2 billion worth of common stock, preferred stock, depositary shares, debt securities, warrants, stock purchase contracts and/or purchase units. Approximately $500 million was drawn against this shelf in connection with our November 2004 warrants offering. An additional 3.5 million shares of our common stock remain reserved for issuance under the CSA we assumed in connection with the TRC Merger. In addition, we have reserved a number of shares of common stock for issuance under our option and other benefit plans for employees and directors and in connection with certain other obligations, and these shares will be available for sale from time to time. Although we have publicly announced a stock repurchase program designed to offset the dilution resulting from issuances pursuant to the CSA and our employee option plan, there is no certainty that we will be successful in acquiring a sufficient number of shares at an acceptable price to accomplish this goal. No prediction can be made as to the effect, if any, that these and other future sales of our common stock, or the availability of common stock for future sales, will have on the market price of the stock. Sales in the public market of substantial amounts of our common stock, or the perception that such sales could occur, could adversely affect prevailing market prices for our common stock.

Increases in market interest rates may hurt the market price of our common stock

We believe that investors consider the distribution rate on REIT stocks, expressed as a percentage of the price of the stocks, relative to market interest rates as an important factor in deciding whether to buy or sell the stocks. If market interest rates go up, prospective purchasers of REIT stocks may expect a higher distribution rate. Higher interest rates would not, however, result in more funds being available for us to distribute and, in fact, would likely increase our borrowing costs and might decrease our funds available for distribution. Thus, higher market interest rates could cause the market price of our common stock to decline.

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