GGP (GGP) 10-Q 2005 Q2 Quarterly report

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.

YESþ                NOo

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

YESþ                NOo

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

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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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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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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

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