GGP (GGP) 10-Q 2007 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, 2007

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 incorporation or organization)	(I.R.S. Employer 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 a large accelerated filer, an accelerated filer, or a non-accelerated filer.

Large accelerated filerþ      Accelerated filero      Non-accelerated filero

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YESo       NOþ

The number of shares of Common Stock, $.01 par value, outstanding on August 3, 2007 was 245,583,133.

GENERAL GROWTH PROPERTIES, INC.
INDEX

	PAGE
	NUMBER
Part I FINANCIAL INFORMATION
Item 1: Consolidated Financial Statements (Unaudited)
Consolidated Balance Sheets as of June 30, 2007 and December 31, 2006		3
Consolidated Statements of Income and Comprehensive Income for the three and six months ended June 30, 2007 and 2006		4
Consolidated Statements of Cash Flows for the six months ended June 30, 2007 and 2006		5
Notes to Consolidated Financial Statements		7
Note 1: Organization		7
Note 2: Intangibles		9
Note 3: Unconsolidated Real Estate Affiliates		10
Note 4: Mortgages, Notes and Loans Payable		17
Note 5: Income Taxes		18
Note 6: Stock-Based Compensation Plans		19
Note 7: Other Assets and Liabilities		21
Note 8: Commitments and Contingencies		21
Note 9: Recently Issued Accounting Pronouncements		23
Note 10: Segments		23
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations		27
Liquidity and Capital Resources		36
Item 3: Quantitative and Qualitative Disclosures about Market Risk		38
Item 4: Controls and Procedures		38
Part II OTHER INFORMATION
Item 1: Legal Proceedings		38
Item 1A: Risk Factors		38
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds		39
Item 3: Defaults Upon Senior Securities		39
Item 4: Submission of Matters to a Vote of Security Holders		39
Item 5: Other Information		41
Item 6: Exhibits		41
SIGNATURE		42
EXHIBIT INDEX		43
Certification
Certification
Certification
Certification
Financial Statements

2

GENERAL GROWTH PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Dollars in thousands)

	June 30,			December 31,
	2007			2006
Assets
Investment in real estate:
Land	$	2,946,676		$	2,952,477
Buildings and equipment		19,555,095			19,379,386
Less accumulated depreciation		(3,070,028	)		(2,766,871	)
Developments in progress		888,535			673,900
Net property and equipment		20,320,278			20,238,892
Investment in and loans to/from Unconsolidated Real Estate Affiliates		1,657,103			1,499,036
Investment land and land held for development and sale		1,711,291			1,655,838
Net investment in real estate		23,688,672			23,393,766
Cash and cash equivalents		65,199			97,139
Accounts and notes receivable, net		311,823			328,890
Goodwill		400,882			371,674
Deferred expenses, net		269,574			252,190
Prepaid expenses and other assets		766,448			797,786
Total assets	$	25,502,598		$	25,241,445
Liabilities and Stockholders’ Equity
Mortgages, notes and loans payable	$	21,223,153		$	20,521,967
Investment in and loans to/from Unconsolidated Real Estate Affiliates		138,668			172,421
Deferred tax liabilities		913,331			1,302,205
Accounts payable and accrued expenses		1,105,128			1,050,192
Total liabilities		23,380,280			23,046,785
Minority interests:
Preferred		121,436			182,828
Common		386,599			347,753
Total minority interests		508,035			530,581
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, 245,520,518 shares issued as of June 30, 2007 and 242,357,416 shares issued as of December 31, 2006		2,455			2,424
Additional paid-in capital		2,591,277			2,533,898
Retained earnings (accumulated deficit)		(904,820	)		(868,391	)
Accumulated other comprehensive income		21,019			9,582
Less common stock in treasury, at cost, 1,806,900 shares as of June 30, 2007 and 290,787 shares as of December 31, 2006		(95,648	)		(13,434	)
Total stockholders’ equity		1,614,283			1,664,079
Total liabilities and stockholders’ equity	$	25,502,598		$	25,241,445

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

3

GENERAL GROWTH PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(UNAUDITED)
(Dollars in thousands, except for per share amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
	2007			2006			2007			2006
Revenues:
Minimum rents	$	443,432		$	425,052		$	879,474		$	862,784
Tenant recoveries		195,403			190,733			394,858			376,176
Overage rents		10,876			8,603			26,456			22,829
Land sales		36,130			33,035			59,923			170,255
Management and other fees		26,348			24,650			53,920			53,362
Other		27,893			27,736			54,244			53,022
Total revenues		740,082			709,809			1,468,875			1,538,428
Expenses:
Real estate taxes		55,089			54,551			111,949			109,515
Repairs and maintenance		47,918			48,762			98,891			95,817
Marketing		10,713			11,639			23,294			23,669
Other property operating costs		97,609			90,412			197,645			176,860
Land sales operations		29,542			25,102			49,686			123,699
Provision for doubtful accounts		(1,701	)		7,106			3,791			13,319
Property management and other costs		56,447			44,569			109,589			89,629
General and administrative		4,030			3,848			16,299			9,007
Depreciation and amortization		163,289			178,372			338,408			343,718
Total expenses		462,936			464,361			949,552			985,233
Operating income		277,146			245,448			519,323			553,195
Interest income		2,944			1,469			4,977			4,690
Interest expense		(275,547	)		(278,611	)		(543,896	)		(557,404	)
Income (loss) before income taxes, minority interest and equity in income of Unconsolidated Real Estate Affiliates		4,543			(31,694	)		(19,596	)		481
Benefit (provision) for income taxes		(17,647	)		(14,490	)		270,744			(40,894	)
Minority interest		(5,085	)		(638	)		(59,502	)		(11,862	)
Equity in income of Unconsolidated Real Estate Affiliates		26,581			21,009			46,940			49,476
Net income (loss)	$	8,392		$	(25,813	)	$	238,586		$	(2,799	)
Basic Earnings Per Share	$	0.03		$	(0.11	)	$	0.98		$	(0.01	)
Diluted Earnings Per Share		0.03			(0.11	)		0.97			(0.01	)
Comprehensive Income (Loss), Net:
Net income (loss)	$	8,392		$	(25,813	)	$	238,586		$	(2,799	)
Other comprehensive income, net of minority interest:
Net unrealized gains (losses) on financial instruments		(14	)		50			(1,082	)		1,336
Accrued pension adjustment		391			(124	)		203			(183	)
Foreign currency translation		9,470			1,102			12,343			4,155
Unrealized gains (losses) on available-for-sale securities		(32	)		113			(27	)		205
Total other comprehensive income, net of minority interest		9,815			1,141			11,437			5,513
Comprehensive income (loss), net	$	18,207		$	(24,672	)	$	250,023		$	2,714

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

4

GENERAL GROWTH PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)

	Six Months Ended June 30,
	2007			2006
Cash Flows from Operating Activities:
Net income (loss)	$	238,586		$	(2,799	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Minority interests		59,502			11,862
Equity in income of Unconsolidated Real Estate Affiliates		(46,519	)		(49,303	)
Provision for doubtful accounts		3,791			13,319
Distributions received from Unconsolidated Real Estate Affiliates		36,225			40,689
Depreciation		322,096			331,053
Amortization		16,312			12,665
Amortization of debt market rate adjustment and other non-cash interest expense		(7,354	)		(6,879	)
Participation expense pursuant to Contingent Stock Agreement		11,736			48,331
Land development and acquisitions expenditures		(84,001	)		(103,408	)
Cost of land sales		21,031			61,630
Tax restructuring benefit		(296,742	)		—
Straight-line rent amortization		(17,755	)		(24,267	)
Amortization of intangibles other than in-place leases		(13,342	)		(17,816	)
Net changes:
Accounts and notes receivable		15,303			18,605
Prepaid expenses and other assets		22,174			26,749
Deferred expenses		(14,410	)		(22,796	)
Accounts payable and accrued expenses and deferred tax liabilities		(37,237	)		(14,558	)
Other, net		8,421			12,581
Net cash provided by operating activities		237,817			335,658
Cash Flows from Investing Activities:
Acquisition/development of real estate and property additions/improvements		(423,068	)		(276,342	)
Proceeds from sales of investment properties		3,251			16,054
Increase in investments in Unconsolidated Real Estate Affiliates		(169,777	)		(64,306	)
Distributions received from Unconsolidated Real Estate Affiliates in excess of income		45,738			117,548
Loans to Unconsolidated Real Estate Affiliates, net		(27,710	)		29,976
Decrease in restricted cash		(8,674	)		(14,081	)
Insurance recoveries		2,507			13,400
Other, net		2,782			8,682
Net cash used in investing activities		(574,951	)		(169,069	)
Cash Flows from Financing Activities:
Proceeds from issuance of mortgages, notes and loans payable		2,079,700			6,629,000
Principal payments on mortgages, notes and loans payable		(1,359,799	)		(6,489,164	)
Deferred financing costs		(23,691	)		(39,923	)
Cash distributions paid to common stockholders		(219,256	)		(196,949	)
Cash distributions paid to holders of Common Units		(47,482	)		(43,490	)
Cash distributions paid to holders of perpetual and convertible preferred units		(8,258	)		(8,724	)
Proceeds from issuance of common stock, including from common stock plans		56,236			17,901
Redemption of preferred minority interests		(60,000	)		—
Purchase of treasury stock		(95,648	)		(53,363	)
Other, net		(1,686	)		(4,217	)
Net cash provided by (used in) financing activities		320,116			(188,929	)
Effect of exchange rate changes on cash		(14,922	)		(5,048	)
Net change in cash and cash equivalents		(31,940	)		(27,388	)
Cash and cash equivalents at beginning of period		97,139			102,791
Cash and cash equivalents at end of period	$	65,199		$	75,403

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

5

GENERAL GROWTH PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(UNAUDITED)
(In thousands)

	Six Months Ended
	June 30,
	2007		2006
Supplemental Disclosure of Cash Flow Information:
Interest paid	$	575,587	$	579,044
Interest capitalized		39,251		25,521
Taxes paid		62,349		12,572
Non-Cash Investing and Financing Activities:
Common stock issued in exchange for Operating Partnership Units	$	7,234	$	3,088
Common stock issued in exchange for convertible preferred units		419		3,833
Common stock issued pursuant to Contingent Stock Agreement		36,669		35,349
Acquisition of joint venture partner share of GGP Ivanhoe IV, Inc.:
Total assets		—		169,415
Total liabilities		—		169,415

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

6

GENERAL GROWTH PROPERTIES, INC.

NOTE 1 ORGANIZATION

Readers of this Quarterly Report should refer to the Company’s (as defined below) audited Consolidated Financial Statements for the year ended December 31, 2006 which are included in the Company’s Annual Report on Form 10-K (“Annual Report”) for the fiscal year ended December 31, 2006 (Commission File No. 1-11656), as certain footnote disclosures which would substantially duplicate those contained in our Annual Report have been omitted from this report. Capitalized terms used, but not defined, in this Quarterly Report have the same meanings as in our Annual Report.

General

General Growth Properties, Inc. (“GGP”), a Delaware corporation, is a self-administered and self-managed real estate investment trust, referred to as a “REIT.” GGP was organized in 1986 and through its subsidiaries and affiliates operates, develops and manages retail and other rental properties, primarily shopping centers, which are located primarily throughout the United States. GGP also has international assets through Unconsolidated Real Estate Affiliates in Brazil, Turkey and Costa Rica in which GGP has invested approximately $207.1 million at June 30, 2007. Additionally, GGP develops and sells land for residential, commercial and other uses primarily in large-scale, long-term master planned communities projects in and around Columbia, Maryland; Summerlin, Nevada; and Houston, Texas. In these notes, the terms “we,” “us” and “our” refer to GGP and its subsidiaries (the “Company”).

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

Basis of Presentation

The accompanying Consolidated Financial Statements include the accounts of GGP, our subsidiaries and joint ventures in which we have a controlling interest. For consolidated joint ventures, the non-controlling partner’s share of operations (generally computed as the joint venture partner’s ownership percentage) is included in Minority Interest. 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, results of operations and cash flows for the interim periods have been included. The results for the interim period ended June 30, 2007 are not necessarily indicative of the results to be obtained for the full fiscal year.

Straight-Line Rents Receivable

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 $177.0 million as of June 30, 2007 and $159.2 million as of December 31, 2006 are included in Accounts and notes receivable, net in our Consolidated Balance Sheets.

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, provision for income taxes, recoverable amounts of receivables and deferred taxes, initial valuations and related amortization periods of deferred costs and intangibles, particularly with respect to acquisitions, and cost ratios and completion percentages used for land sales. Actual results could differ from these and other estimates.

Reclassifications

Certain amounts in the 2006 Consolidated Financial Statements have been reclassified to conform to the current period presentation.

7

GENERAL GROWTH PROPERTIES, INC.

Earnings Per Share (“EPS”)

Information related to our EPS calculations is summarized as follows:

	Three Months Ended June 30,
	2007				2006
	Basic		Diluted		Basic			Diluted
(In thousands)
Numerators:Net income (loss)	$	8,392	$	8,392		(25,813	)		(25,813	)
Denominators:
Weighted average number of common shares outstanding — basic		244,960		244,960		241,330			241,330
Effect of dilutive securities — stock options		—		667		—			—
Weighted average number of common shares outstanding — diluted		244,960		245,627		241,330			241,330

	Six Months Ended June 30,
	2007				2006
	Basic		Diluted		Basic			Diluted
(In thousands)
Numerators:Net income (loss)	$	238,586	$	238,586		(2,799	)		(2,799	)
Denominators:
Weighted average number of common shares outstanding — basic		244,165		244,165		240,978			240,978
Effect of dilutive securities — stock options		—		685		—			—
Weighted average number of common shares outstanding — diluted		244,165		244,850		240,978			240,978

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 requirements for vesting were not satisfied. Such options totaled approximately 3.8 million shares for the three months ended June 30, 2007, approximately 3.8 million shares for the six months ended June 30, 2007, approximately 4.2 million shares for the three months ended June 30, 2006, and approximately 4.1 million shares for the six months ended June 30, 2006. 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. Finally, the exchangeable senior notes that were issued in April 2007 (Note 4) are also excluded from EPS because the conditions for exchange were not satisfied as of June 30, 2007.

Transactions With Affiliates

Management and other fee revenues primarily represent management and leasing fees, development fees, financing fees and fees for other ancillary services performed for the benefit of certain of the Unconsolidated Real Estate Affiliates and for properties owned by third parties. Fees earned from the Unconsolidated Properties totaled approximately $24.8 million for the three months ended June 30, 2007, approximately $50.7 million for the six months ended June 30, 2007, approximately $27.5 million for the three months ended June 30, 2006 and approximately $49.0 million for the six months ended June 30, 2006. Such fees are recognized as revenue when earned.

8

GENERAL GROWTH PROPERTIES, INC.

NOTE 2     INTANGIBLES

The following table summarizes our intangible assets and liabilities:

				Accumulated			Net
	Gross Asset			(Amortization)/			Carrying
(In thousands)	(Liability)			Accretion			Amount
As of June 30, 2007
Tenant leases:
In-place value	$	669,231		$	(376,408	)	$	292,823
Above-market		107,085			(65,685	)		41,400
Below-market		(294,938	)		206,655			(88,283	)
Ground leases:
Above-market		(16,968	)		1,243			(15,725	)
Below-market		293,435			(15,947	)		277,488
Real estate tax stabilization agreement		91,879			(10,463	)		81,416
As of December 31, 2006
Tenant leases:
In-place value	$	667,492		$	(314,270	)	$	353,222
Above-market		107,157			(53,176	)		53,981
Below-market		(294,052	)		176,089			(117,963	)
Ground leases:
Above-market		(16,968	)		1,007			(15,961	)
Below-market		293,435			(12,919	)		280,516
Real estate tax stabilization agreement		91,879			(8,501	)		83,378

Changes in gross asset (liability) balances in 2007 are the result of the acquisition of the minority interest in two consolidated joint ventures.

The gross asset balances of the in-place value of tenant leases are included in Buildings and equipment in our Consolidated Balance Sheets. The above-market and below-market tenant and ground leases are included in Prepaid expenses and other assets and Accounts payable and accrued expenses as detailed in Note 7.

Amortization/accretion of these intangible assets and liabilities, and similar assets and liabilities from our Unconsolidated Real Estate Affiliates at our share, decreased income (excluding the impact of minority interest and the provision for income taxes) by approximately $26.1 million for the three months ended June 30, 2007, approximately $55.2 million for the six months ended June 30, 2007, approximately $31.0 million for the three months ended June 30, 2006 and approximately $60.3 million for the six months ended June 30, 2006.

Future amortization, including our share of such items from Unconsolidated Real Estate Affiliates, is estimated to decrease income (excluding the impact of minority interest and the provision for income taxes) by approximately $110 million in 2007, $90 million in 2008, $60 million in 2009, $40 million in 2010, and $30 million in 2011.

9

GENERAL GROWTH PROPERTIES, INC.

NOTE 3 UNCONSOLIDATED REAL ESTATE AFFILIATES

Condensed Combined Financial Information of Unconsolidated Real Estate Affiliates
Following is summarized financial information for our Unconsolidated Real Estate Affiliates as of June 30, 2007 and December 31, 2006 and for the three and six months ended June 30, 2007 and 2006.

	June 30,			December 31,
(In thousands)	2007			2006
Condensed Combined Balance Sheets — Unconsolidated Real Estate Affiliates
Assets:
Land	$	1,005,996		$	988,018
Buildings and equipment		8,304,404			8,158,030
Less accumulated depreciation		(1,687,705	)		(1,590,812	)
Developments in progress		770,373			551,464
Net property and equipment		8,393,068			8,106,700
Investment in unconsolidated joint ventures		11,335			7,424
Investment land and land held for development and sale		289,497			290,273
Net investment in real estate		8,693,900			8,404,397
Cash and cash equivalents		184,850			180,203
Accounts and notes receivable, net		145,539			165,049
Deferred expenses, net		153,898			155,051
Prepaid expenses and other assets		555,537			509,324
Total assets	$	9,733,724		$	9,414,024
Liabilities and Owners’ Equity:
Mortgages, notes and loans payable	$	7,727,773		$	7,752,889
Investment in unconsolidated joint ventures		3,147			—
Accounts payable and accrued expenses		525,140			558,974
Owners’ equity		1,477,664			1,102,161
Total liabilities and owners’ equity	$	9,733,724		$	9,414,024
Investment In and Loans To/From Unconsolidated Real Estate Affiliates, Net
Owners’ equity	$	1,477,664		$	1,102,161
Less joint venture partners’ equity		(783,351	)		(600,412	)
Capital or basis differences and loans		824,122			824,866
Investment in and loans to/from
Unconsolidated Real Estate Affiliates, net	$	1,518,435		$	1,326,615

10

GENERAL GROWTH PROPERTIES, INC.

	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands)	2007			2006			2007			2006
Condensed Combined Statements of Income — Unconsolidated Real Estate Affiliates
Revenues:
Minimum rents	$	221,433		$	206,575		$	442,313		$	418,175
Tenant recoveries		96,159			92,443			193,521			186,382
Overage rents		3,061			2,538			7,858			7,236
Land sales		43,164			38,395			68,613			73,726
Management and other fees		8,521			1,964			17,002			1,964
Other		45,453			39,499			86,941			82,040
Total revenues		417,791			381,414			816,248			769,523
Expenses:
Real estate taxes		29,397			29,702			60,061			59,847
Repairs and maintenance		21,353			20,894			43,898			42,217
Marketing		5,730			5,795			12,511			12,917
Other property operating costs		80,410			76,355			159,118			149,736
Land sales operations		25,243			31,769			36,120			50,686
Provision for doubtful accounts		816			1,697			2,608			1,871
Property management and other costs		23,744			16,727			48,024			32,882
General and administrative		2,846			917			3,115			2,861
Depreciation and amortization		69,699			63,680			142,445			129,443
Total expenses		259,238			247,536			507,900			482,460
Operating income		158,553			133,878			308,348			287,063
Interest income		9,493			5,832			16,533			11,834
Interest expense		(100,545	)		(87,348	)		(200,338	)		(168,384	)
Provision for income taxes		(6,048	)		(483	)		(6,758	)		(807	)
Minority interest		(271	)		—			(306	)		—
Equity in income of unconsolidated joint ventures		1,364			1,724			3,309			3,152
Net income	$	62,546		$	53,603		$	120,788		$	132,858
Equity In Income of Unconsolidated Real Estate Affiliates
Net income	$	62,546		$	53,603		$	120,788		$	132,858
Joint venture partners’ share of income		(33,359	)		(28,961	)		(64,414	)		(63,014	)
Amortization of capital or basis differences		(156	)		(3,633	)		(4,709	)		(20,368	)
Elimination of Unconsolidated Real Estate Affiliates loan interest		(2,450	)		—			(4,725	)		—
Equity in income of Unconsolidated Real Estate Affiliates	$	26,581		$	21,009		$	46,940		$	49,476

Condensed Financial Information of Individually Significant Unconsolidated Real Estate Affiliates

Following is summarized financial information for GGP/Homart, Inc. (“GGP/Homart I”), GGP/Homart II L.L.C. (“GGP/Homart II”), GGP-TRS L.L.C. (“GGP-Teachers”) and The Woodlands Land Development Holdings, L.P. (“The Woodlands Partnership”). For financial reporting purposes, each of these joint ventures is considered an individually significant Unconsolidated Real Estate Affiliate.

On July 6, 2007, we acquired the fifty percent interest owned by New York State Common Retirement Fund (“NYSCRF”) in the GGP/Homart I portfolio of twenty-two properties pursuant to an election by NYSCRF to exercise its exchange right with respect to its ownership in GGP/Homart I. The approximate $950 million purchase price for NYSCRF’s ownership interest, which we computed pursuant to the GGP/Homart I shareholders agreement, was primarily funded by a $750 million bank loan which, including amortization of the fees, bears interest at LIBOR plus 140 basis points. The acquisition also includes the assumption of NYSCRF’s share of existing mortgage debt (approximately $1.05 billion). As a result of this transaction, we own 100% of the GGP/Homart I portfolio and subsequently will consolidate the respective operations from the acquisition date.

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The properties included in the GGP/Homart I portfolio include: Arrowhead Towne Center, Bay City Mall, Brass Mill Center, Chula Vista Center, Columbiana Centre, Deerbrook Mall, Lakeland Square Mall, Moreno Valley Mall, Neshaminy Mall, Newgate Mall, Newpark Mall, North Point Mall, The Parks at Arlington, Pembroke Lakes Mall, The Shoppes at Buckland Hills, Steeplegate Mall, Superstition Springs Center, Tysons Galleria, Vista Ridge Mall, Washington Park Mall, West Oaks Mall and The Woodlands Mall.

	GGP/Homart I
	June 30,			December 31,
(In thousands)	2007			2006
Assets:
Land	$	158,589		$	157,708
Buildings and equipment		1,898,575			1,879,992
Less accumulated depreciation		(549,107	)		(517,187	)
Developments in progress		16,954			13,216
Investment in unconsolidated joint ventures		10,671			7,424
Net investment in real estate		1,535,682			1,541,153
Cash and cash equivalents		21,151			15,871
Accounts receivable, net		41,963			48,498
Deferred expenses, net		43,771			44,773
Prepaid expenses and other assets		165,319			174,854
Total assets	$	1,807,886		$	1,825,149
Liabilities and Owners’ Equity:
Mortgages, notes and loans payable	$	2,028,641		$	2,041,796
Investment in unconsolidated joint ventures		3,147			—
Accounts payable and accrued expenses		52,289			58,408
Owners’ equity (deficit)		(276,191	)		(275,055	)
Total liabilities and owners’ equity	$	1,807,886		$	1,825,149

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	GGP/Homart I						GGP/Homart I
	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands)	2007			2006			2007			2006
Revenues:
Minimum rents	$	58,724		$	57,012		$	117,190		$	115,583
Tenant recoveries		25,578			23,666			51,426			48,232
Overage rents		339			280			1,851			2,016
Other		2,468			2,369			4,842			4,608
Total revenues		87,109			83,327			175,309			170,439
Expenses:
Real estate taxes		7,587			7,758			15,491			15,656
Repairs and maintenance		6,156			6,108			12,762			12,607
Marketing		1,697			1,728			3,688			4,000
Other property operating costs		11,228			10,712			21,434			21,063
Provision for doubtful accounts		131			381			210			187
Property management and other costs		5,606			5,453			11,449			10,994
General and administrative		121			4			212			175
Depreciation and amortization		17,796			17,967			36,780			35,885
Total expenses		50,322			50,111			102,026			100,567
Operating income		36,787			33,216			73,283			69,872
Interest income		4,682			2,772			9,376			4,858
Interest expense		(28,067	)		(22,931	)		(56,042	)		(44,580	)
Provision for income taxes		(412	)		(101	)		(479	)		(133	)
Equity in income of unconsolidated joint ventures		1,364			1,724			3,309			3,152
Net income	$	14,354		$	14,680		$	29,447		$	33,169

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	GGP/Homart II
	June 30,			December 31,
(In thousands)	2007			2006
Assets:
Land	$	224,158		$	224,158
Buildings and equipment		2,362,034			2,261,123
Less accumulated depreciation		(361,709	)		(326,340	)
Developments in progress		308,390			286,396
Net investment in real estate		2,532,873			2,445,337
Cash and cash equivalents		10,276			6,289
Accounts receivable, net		34,610			35,506
Deferred expenses, net		59,314			58,712
Prepaid expenses and other assets		41,411			36,656
Total assets	$	2,678,484		$	2,582,500
Liabilities and Owners’ Equity:
Mortgages, notes and loans payable	$	2,263,186		$	2,284,763
Accounts payable and accrued expenses		122,371			146,781
Owners’ equity		292,927			150,956
Total liabilities and owners’ equity	$	2,678,484		$	2,582,500

	GGP/Homart II						GGP/Homart II
	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands)	2007			2006			2007			2006
Revenues:
Minimum rents	$	53,379		$	48,136		$	106,611		$	100,670
Tenant recoveries		24,454			22,642			49,202			46,233
Overage rents		603			523			1,870			1,592
Other		2,002			1,646			3,965			3,648
Total revenues		80,438			72,947			161,648			152,143
Expenses:
Real estate taxes		6,886			7,471			14,966			14,919
Repairs and maintenance		4,917			4,485			9,811			8,968
Marketing		1,521			1,757			3,469			3,796
Other property operating costs		9,312			8,961			19,199			17,420
Provision for doubtful accounts		46			258			666			338
Property management and other costs		5,115			4,591			10,262			9,385
General and administrative		2,625			849			2,757			2,588
Depreciation and amortization		19,912			16,128			39,066			31,638
Total expenses		50,334			44,500			100,196			89,052
Operating income		30,104			28,447			61,452			63,091
Interest income		2,139			1,971			4,181			4,843
Interest expense		(27,764	)		(20,721	)		(55,452	)		(40,833	)
Provision for income taxes		(960	)		(49	)		(1,534	)		(127	)
Net income	$	3,519		$	9,648		$	8,647		$	26,974

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	GGP/Teachers
	June 30,			December 31,
(In thousands)	2007			2006
Assets:
Land	$	176,761		$	176,761
Buildings and equipment		917,691			908,786
Less accumulated depreciation		(102,259	)		(89,323	)
Developments in progress		126,224			76,991
Net investment in real estate		1,118,417			1,073,215
Cash and cash equivalents		17,489			19,029
Accounts receivable, net		9,648			11,347
Deferred expenses, net		16,240			15,280
Prepaid expenses and other assets		12,928			13,980
Total assets	$	1,174,722		$	1,132,851
Liabilities and Owners’ Equity:
Mortgages, notes and loans payable	$	929,095		$	933,375
Accounts payable and accrued expenses		81,742			88,188
Owners’ equity		163,885			111,288
Total liabilities and owners’ equity	$	1,174,722		$	1,132,851

	GGP/Teachers						GGP/Teachers
	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands)	2007			2006			2007			2006
Revenues:
Minimum rents	$	26,572		$	26,652		$	54,379		$	52,303
Tenant recoveries		11,289			11,857			22,542			22,705
Overage rents		677			533			868			1,127
Other		602			559			1,087			1,077
Total revenues		39,140			39,601			78,876			77,212
Expenses:
Real estate taxes		2,699			2,945			5,322			5,859
Repairs and maintenance		2,186			1,924			4,254			3,817
Marketing		917			843			1,843			1,881
Other property operating costs		4,788			4,491			9,551			8,981
Provision for doubtful accounts		194			336			406			228
Property management and other costs		2,304			2,178			4,528			4,342
General and administrative		70			50			109			84
Depreciation and amortization		6,955			6,298			14,218			13,758
Total expenses		20,113			19,065			40,231			38,950
Operating income		19,027			20,536			38,645			38,262
Interest income		178			243			431			428
Interest expense		(11,605	)		(10,592	)		(23,307	)		(20,979	)
Provision for income taxes		(139	)		(226	)		(149	)		(405	)
Net income	$	7,461		$	9,961		$	15,620		$	17,306

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	The Woodlands Partnership
	June 30,			December 31,
(In thousands)	2007			2006
Assets:
Land	$	12,349		$	13,828
Buildings and equipment		78,561			91,485
Less accumulated depreciation		(17,927	)		(19,271	)
Developments in progress		28,288			6,939
Investment land and land held for development and sale		289,497			290,273
Net investment in real estate		390,768			383,254
Cash and cash equivalents		4,385			15,219
Deferred expenses, net		2,504			2,782
Prepaid expenses and other assets		108,626			97,978
Total assets	$	506,283		$	499,233
Liabilities and Owners’ Equity:
Mortgages, notes and loans payable	$	319,090		$	321,724
Accounts payable and accrued expenses		63,455			58,805
Owners’ equity		123,738			118,704
Total liabilities and owners’ equity	$	506,283		$	499,233

	The Woodlands Partnership						The Woodlands Partnership
	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands)	2007			2006			2007			2006
Revenues:
Minimum rents	$	131		$	483		$	451		$	719
Land sales		43,164			37,145			68,613			72,476
Other		1,343			9,547			11,266			17,626
Total revenues		44,638			47,175			80,330			90,821
Expenses:
Real estate taxes		47			144			104			189
Repairs and maintenance		46			105			185			132
Other property operating costs		10,246			5,316			21,679			13,484
Land sales operations		25,243			31,239			36,120			50,156
Depreciation and amortization		977			881			2,047			2,283
Total expenses		36,559			37,685			60,135			66,244
Operating income		8,079			9,490			20,195			24,577
Interest income		114			70			240			141
Interest expense		(2,442	)		(4,165	)		(3,909	)		(4,702	)
Provision for income taxes		(390	)		—			(390	)		—
Net income	$	5,361		$	5,395		$	16,136		$	20,016

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NOTE 4 MORTGAGES, NOTES AND LOANS PAYABLE

Mortgages, notes and loans payable are summarized as follows:

	June 30,		December 31,
(In thousands)	2007		2006
Fixed-rate debt:
Commercial mortgage-backed securities	$	868,765	$	868,765
Other collateralized mortgages, notes and loans payable		13,775,953		13,762,381
Corporate and other unsecured term loans		3,895,648		2,386,334
Total fixed-rate debt		18,540,366		17,017,480
Variable-rate debt:
Other collateralized mortgages, notes and loans payable		287,387		388,287
Credit facilities		201,700		60,000
Corporate and other unsecured term loans		2,193,700		3,056,200
Total variable-rate debt		2,682,787		3,504,487
	$	21,223,153	$	20,521,967

The weighted-average effective annual interest rate (which includes both the effects of swaps and deferred finance costs) on our mortgages, notes and loans payable was 5.7% at June 30, 2007, 5.82% at December 31, 2006 and 5.78% at June 30, 2006. Such debt has various maturities through 2095 with a weighted-average remaining term of 5.89 years as of June 30, 2007.

Certain properties, including those within the portfolios collateralized by commercial mortgage-backed securities, are subject to financial performance covenants, primarily debt service coverage ratios.

Exchangeable Senior Notes

In April 2007, GGPLP completed the sale of $1.55 billion aggregate principal amount of 3.98% Exchangeable Senior Notes (the “Notes”) pursuant to Rule 144A under the Securities Act of 1933.

Interest on the Notes is payable semi-annually in arrears on April 15 and October 15 of each year, beginning October 15, 2007. The Notes will mature on April 15, 2027 unless previously redeemed by GGPLP, repurchased by GGPLP or exchanged in accordance with their terms prior to such date. Prior to April 15, 2012, we will not have the right to redeem the Notes, except to preserve our status as a REIT. On or after April 15, 2012, we may redeem for cash all or part of the Notes at any time, at 100% of the principal amount of the Notes, plus accrued and unpaid interest, if any, to the redemption date. On each of April 15, 2012, April 15, 2017 and April 15, 2022, holders of the Notes may require us to repurchase the Notes, in whole or in part, for cash equal to 100% of the principal amount of Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase.

The Notes are exchangeable for GGP common stock or a combination of cash and common stock, at our option, upon the satisfaction of certain conditions, including conditions relating to the market price of our common stock, the trading price of the Notes, the occurrence of certain corporate events and transactions, a call for redemption of the Notes and any failure by us to maintain a listing of our common stock on a national securities exchange. We currently intend to settle the principal amount of the Notes in cash and any premium in cash, shares of our common stock or a combination of both.

The initial exchange rate for each $1,000 principal amount of notes is approximately 11.27 shares of GGP common stock, representing an exchange price of approximately $88.72 per share and an exchange premium of 35%, which was based on the closing price of our common stock on April 10, 2007. The initial exchange rate is subject to adjustment under certain circumstances, including a reduction in the exchange rate resulting from an increase in our dividend.

We intend to register, for the benefit of the holders of the Notes, the GGP common stock issuable upon the exchange of the Notes (approximately 17.5 million shares) and agree to maintain the effectiveness of such registration throughout the term of the Notes. In the event of a registration default, we will increase the applicable exchange rate by 3% (approximately 0.5 million shares) until we are no longer in default. As we believe that the likelihood of making such exchange rate adjustment is remote, no amounts reflecting a contingent liability have been accrued.

Proceeds from the offering, net of related fees, were approximately $1.52 billion and were used to repay $850 million of corporate unsecured debt, to repay approximately $400 million on our revolving credit facility, to pay approximately $110 million of dividends, to redeem $60 million of perpetual preferred units and for other general

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GENERAL GROWTH PROPERTIES, INC.

corporate uses. At June 30, 2007 the interest rate on the remaining corporate unsecured debt and the revolving credit facility was 6.57%.

Interest Rate Swaps

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

	2006 Credit			Property
	Agreement			Specific
Total notional amount (in millions)	$	200.0		$	195.0
Average fixed pay rate		5.11	%		4.78	%
Average variable receive rate	LIBOR			LIBOR

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

Letters of Credit and Surety Bonds

We had outstanding letters of credit and surety bonds of approximately $222.4 million as of June 30, 2007. These letters of credit and bonds were issued primarily in connection with insurance requirements, special real estate assessments and construction obligations.

NOTE 5 INCOME TAXES

On January 1, 2007, we adopted Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 prescribes a recognition threshold that a tax position is required to meet before recognition in the financial statements and provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues.

At January 1, 2007, we had total unrecognized tax benefits of approximately $135.1 million, of which approximately $69 million would impact our effective tax rate. These unrecognized tax benefits increased our income tax liabilities by $81.9 million, increased goodwill by $27.9 million and cumulatively reduced retained earnings by $54.2 million. As of January 1, 2007, we had accrued interest of approximately $11.9 million related to these unrecognized tax benefits and no penalties. Prior to adoption of FIN 48, we did not treat either interest or penalties related to tax uncertainties as part of income tax expense. With the adoption of FIN 48, we have chosen to change this accounting policy. As a result, we will recognize and report interest and penalties, if necessary, within our provision for income tax expense from January 1, 2007 forward. We recognized potential interest expense related to the unrecognized tax benefits of $3.9 million for the three months ended June 30, 2007 and $6.2 million for the six months ended June 30, 2007.

Generally, we are currently open to audit under the statute of limitations by the Internal Revenue Service for the years ending December 31, 2003 through 2006 and are open to state taxing authorities for years ending December 31, 2002 through 2006. Several of our taxable REIT subsidiaries are under examination by the Internal Revenue Service for the years 2001 through 2005. During the quarter, we changed our recognition and measurement of a position as a result of negotiations with the Internal Revenue Service. GAAP requires that the change in measurement of contingencies as of the November 2004 merger date (approximately $1.3 million) be recorded as an adjustment to goodwill. We are unable to determine when the remaining audits will be resolved.

Based on our assessment of the expected outcome of these remaining examinations or examinations that may commence, or as a result of the expiration of the statute of limitations for specific jurisdictions, it is reasonably possible that the related unrecognized tax benefits for tax positions taken regarding previously filed tax returns will materially change from those recorded at January 1, 2007. A material change in unrecognized tax benefits could have a material effect on our statements of income and comprehensive income. Included in the approximately $135.1 million of unrecognized benefits at January 1, 2007 discussed above is approximately $20 million, which due to the reasons above, could significantly increase or decrease during the next twelve months.

Effective March 31, 2007, through a series of transactions, a private REIT owned by GGPLP was contributed to TRCLP and one of our TRS entities became a qualified REIT subsidiary of that private REIT. This transaction

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GENERAL GROWTH PROPERTIES, INC.

resulted in approximately a $330 million decrease in our net deferred tax liabilities, an approximate $30 million increase in our current taxes payable and an approximate $300 million income tax benefit related to the properties now owned by that private REIT.

NOTE 6 STOCK-BASED COMPENSATION PLANS

Incentive Stock Plans

The following tables summarize stock option activity for the 2003 Incentive Stock Plan as of and for the six months ended June 30, 2007 and 2006.

	2007					2006
				Weighted					Weighted
				Average					Average
	Shares			Exercise Price		Shares			Exercise Price
Stock Options Outstanding at January 1		3,167,348		$	38.41		2,546,174		$	29.57
Granted		1,205,000			65.81		1,270,000			49.98
Exercised		(1,318,748	)		33.81		(453,226	)		27.03
Exchanged for restricted stock		—			—		(30,000	)		47.26
Forfeited		—			—		(145,000	)		43.10
Expired		—			—		(600	)		9.90
Stock Options Outstanding at June 30		3,053,600		$	51.20		3,187,348		$	37.28

	Stock Options Outstanding						Stock Options Exercisable
			Weighted						Weighted
			Average		Weighted				Average		Weighted
			Remaining		Average				Remaining		Average
			Contractual		Exercise				Contractual		Exercise
Range of Exercise Prices	Shares		Term (in years)		Price		Shares		Term (in years)		Price
In-the-money stock options
$0 - $6.58		—		—		—		—		—		—
$6.58 - $13.16		5,100		2.8	$	9.99		5,100		2.8	$	9.99
$13.16 - $19.74		73,000		5.1		15.41		73,000		5.1		15.41
$19.74 - $26.32		—		—		—		—		—		—
$26.32 - $32.91		197,000		1.6		30.94		145,000		1.6		30.94
$32.91 - $39.49		571,000		2.7		35.71		351,000		2.7		35.57
$39.49 - $46.07		50,000		3.3		44.59		10,000		3.3		44.59
$46.07 - $52.65		952,500		3.7		49.52		522,500		3.5		50.01
Anti -dilutive stock options
$65.81		1,205,000		4.7		65.81		201,000		4.7		65.81
Total		3,053,600		3.4	$	51.20		1,307,600		3.4	$	44.32
Intrinsic value (in thousands)	$	20,825					$	13,871

The intrinsic value of outstanding and exercisable stock options as of June 30, 2007 represents the excess of our closing stock price ($52.95) over the exercise price multiplied by the applicable number of shares that may be acquired upon exercise of stock options. The intrinsic value of exercised stock options represents the excess of our stock price at the time the option was exercised over the exercise price and was $39.3 million for options exercised during the six months ended June 30, 2007 and $10.1 million for options exercised during the six months ended June 30, 2006.

The weighted-average fair value of stock options as of the grant date was $11.07 for stock options granted during the six months ended June 30, 2007 and $7.62 for stock options granted during the six months ended June 30, 2006.

Stock options generally vest 20% at the time of the grant and in 20% annual increments thereafter. In February 2007, however, in lieu of awarding options similar in size to prior years to two of our senior executives, the Compensation Committee of our Board of Directors accelerated the vesting of options held by these executives so that all such options became immediately vested and exercisable. As a result, the vesting of 705,000 options was accelerated and compensation expense of $4.1 million which would have been recognized in 2007 through 2010 was recognized in the first quarter of 2007.

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Restricted Stock

The following table summarizes restricted stock activity as of and for the six months ended June 30, 2007 and 2006.

	2007					2006
				Weighted					Weighted
				Average					Average
				Grant Date					Grant Date
	Shares			Fair Value		Shares			Fair Value
Nonvested restricted stock grants outstanding as of January 1		72,666		$	47.62		15,000		$	16.77
Granted		96,500			65.29		99,000			47.91
Vested		(32,670	)		49.11		(41,334	)		37.13
Nonvested restricted stock grants outstanding as of June 30		136,496		$	59.75		72,666		$	47.62
Intrinsic value (in thousands)	$	7,227				$	3,274

The total fair value of restricted stock grants which vested during the six months ended June 30, 2007 and during the six months ended June 30, 2006 was $2.0 million in each period.

Threshold-Vesting Stock Options

The following table summarizes TSO activity as of June 30, 2007 by grant year.

	TSO Grant Year
	2007			2006			2005
Granted		1,400,000			1,400,000			1,000,000
Forfeited		(35,048	)		(118,936	)		(119,666	)
Vested and exercised		—			—			(880,334	)
TSOs outstanding at June 30, 2007		1,364,952			1,281,064			—
Intrinsic value (in thousands)	$	—		$	3,177		$	—
Exercise price	$	65.81		$	50.47		$	35.41
Threshold price		92.30			70.79			49.66
Fair value of options on grant date		9.54			6.51			3.81
Remaining contractual term (in years)		4.7			3.7			—

In addition to the TSOs above, which are accounted for pursuant to SFAS 123(R), 148,302 vested, but unexercised, TSOs granted prior to 2004 are accounted for using the intrinsic value method.

Other Required Disclosures

Historical data, such as the past performance of our common stock and the length of service by employees, was used to estimate expected life of the TSO’s and our stock options and represents the period of time that options are expected to be outstanding. The weighted average estimated value of stock options and TSOs granted during the six months ended June 30, 2007 and 2006 were based on the following assumptions:

	2007			2006
Risk-free interest rate		4.70	%		4.43	%
Dividend yield		4.00			4.00
Expected volatility		24.72			22.94
Expected life (in years)		3.0-3.5			2.5-3.5

Compensation expense related to the Incentive Stock Plans, TSOs and restricted stock was $2.4 million for the three months ended June 30, 2007, $13.7 million for the six months ended June 30, 2007, $2.3 million for the three months ended June 30, 2006 and $7.3 million for the six months ended June 30, 2006.

For the six months ended June 30, 2007, total compensation expense which had not yet been recognized related to nonvested options, TSOs and restricted stock grants was $35.1 million. Of this total, approximately $7.7 million is

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expected to be recognized in the remaining months of 2007, approximately $12.7 million in 2008, approximately $8.8 million in 2009, approximately $4.1 million in 2010 and approximately $1.6 million in 2011. These amounts may be impacted by future grants, changes in forfeiture estimates or vesting terms, actual forfeiture rates which differ from estimated forfeitures and/or timing of TSO vesting.

NOTE 7 OTHER ASSETS AND LIABILITIES

The following table summarizes the significant components of “Prepaid Expenses and Other Assets.”

	June 30,			December 31,
(In thousands)	2007			2006
Below-market ground leases	$	277,488		$	280,516
Receivables — finance leases and bonds		100,315			118,459
Security and escrow deposits		84,360			76,834
Real estate tax stabilization agreement		81,416			83,378
Special Improvement District receivable		59,146			64,819
Above-market tenant leases		41,400			53,981
Prepaid expenses		28,672			37,528
Insurance recovery receivable		25,451	*		14,952
Funded defined contribution plan assets		14,994			17,119
Other		53,206			50,200
	$	766,448		$	797,786

* Includes $13.5 million related to insurance settlement (Note 8).

The following table summarizes the significant components of “Accounts Payable and Accrued Expenses.”

	June 30,		December 31,
(In thousands)	2007		2006
Construction payables	$	174,919	$	188,038
Accounts payable and accrued expenses		158,932		200,936
Unrecognized tax benefits		153,342		—
Accrued interest		117,101		102,870
Below-market tenant leases		88,283		117,963
Accrued real estate taxes		76,165		71,816
Deferred gains/income		64,635		56,414
Hughes participation payable		65,860		90,793
Accrued payroll and other employee liabilities		53,058		58,372
Tenant and other deposits		33,204		32,887
Above-market ground leases		15,725		15,961
Capital lease obligations		14,698		14,967
Funded defined contribution plan liabilities		14,994		17,119
Other		74,212		82,056
	$	1,105,128	$	1,050,192

NOTE 8 COMMITMENTS AND CONTINGENCIES

In the normal course of business, from time to time, we are involved in legal proceedings 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. The leases generally provide us with a right of first refusal in the event of a proposed sale of the property by the landlord. Rental payments are expensed as incurred and have, to the extent applicable, been straight-lined over the term of the lease. Rental expense, including participation rent and excluding amortization of above and below-market ground leases and straight-line rents, was $0.7 million for the three months ended June 30, 2007, $4.1 million for the six months ended June 30, 2007, $2.5

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million for the three months ended June 30, 2006 and $4.8 million for the six months ended June 30, 2006.

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. In conjunction with the acquisition of The Grand Canal Shoppes in 2004, we entered into an 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. The Palazzo is currently under construction and is expected to be completed in early 2008. If completed as specified under the terms of the Phase II Agreement, we will purchase the Phase II Acquisition retail space at a price as defined by the Phase II Agreement. Based on current construction plans, progress and estimated rents, we believe the purchase price will be approximately $600 million. The Phase II Agreement is subject to the satisfaction of customary closing conditions.

See Note 5 for our obligations related to FIN 48.

Contingent Stock Agreement

In conjunction with the TRC Merger, we assumed TRC’s obligations under a Contingent Stock Agreement (“CSA”). TRC entered into the CSA in 1996 when it acquired The Hughes Corporation (“Hughes”). This acquisition included various assets, including Summerlin (the “CSA Assets”), a development in our Master Planned Communities segment. We agreed that the TRC Merger would not have a prejudicial effect on the former Hughes owners or their successors (the “Beneficiaries”) with respect to their receipt of securities pursuant to the CSA. We further agreed to indemnify and hold harmless the Beneficiaries against losses arising out of any breach by us of these covenants.

Under the CSA, we are required to issue shares of our common stock semi-annually (February and August) to the Beneficiaries. The number of shares to be issued is based on cash flows from the development and/or sale of the CSA Assets and our stock price. We account for the Beneficiaries’ share of earnings from the CSA Assets as an operating expense. We delivered 699,000 shares of our common stock (including 147,000 treasury shares) to the Beneficiaries in the six months ended June 30, 2007 and 756,000 (including 668,000 treasury shares) in the six months ended June 30, 2006.

We are also required to make a final distribution to the Beneficiaries in 2009. The amount of this distribution will be based on the appraised values of the CSA Assets and is expected to be significant. We will account for this distribution as additional investments in the related assets (that is, contingent consideration).

Hurricane Damages

In September 2005, two of our operating retail properties in Louisiana incurred hurricane and/or vandalism damage. Riverwalk Marketplace, which is located near the convention center in downtown New Orleans, partially reopened in November 2005. Though now fully open, occupancy and traffic levels continue to be below pre-hurricane levels. Oakwood Center, located in Gretna, Louisiana, is currently scheduled to reopen on October 19, 2007. We have comprehensive insurance coverage for both property damage and business interruption and, therefore, have recorded insurance recovery receivables for both of these coverages.

In June 2007 as part of a final settlement, we negotiated an additional payment of $13.5 million with our insurance carrier for all outstanding claims related to Riverwalk Marketplace, including property damage and business interruption. As a result of the settlement, the proceeds from the additional payment (collected on July 5, 2007) were first applied against the Riverwalk Marketplace insurance recovery receivable (approximately $1.9 million) and the remainder was recognized as business interruption, of which approximately $6.8 million is included as minimum rent and approximately $4.8 million is included as a reduction to provision for doubtful accounts in our Consolidated Statements of Income and Comprehensive Income.

The net book value of the property damage at Oakwood Center is currently estimated to be approximately $34.2 million. However, we continue to assess the damage estimates and are having ongoing discussions with our insurance carriers regarding the scope of repair, cleaning, and replacement required. The actual net book value write-off could vary from this estimate. Changes to these estimates have been, and will be, recorded in the periods in which they are determined.

We believe it is probable that insurance proceeds will be sufficient to cover the cost of restoring the property damage and certain business interruption amounts at Oakwood Center; however, certain deductibles, limitations and exclusions are expected to apply with respect to both current and future matters. No determination has yet been

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made as to the total amount or timing of insurance payments. As of June 30, 2007, however, an aggregate of $29.3 million in insurance proceeds related to property damage and business interruption have been received for Oakwood Center, of which $25 million was received as final settlement with one of our insurance carriers. These proceeds have been applied against insurance recovery receivables, which have primarily been for property damage incurred. Although it is likely that certain of the amounts collected in such final settlement constitutes payment of a portion of our business interruption claims, GAAP precludes any revenue recognition until final settlement with our remaining insurance carriers or cumulative non-refundable payments exceed property operating expense reimbursements previously recognized. In addition, as certain disputes currently exist or may occur in the future with certain of our insurance carriers, we have initiated litigation to preserve our rights concerning our claims. Finally, as of June 30, 2007, the majority of the remaining Oakwood Center insurance recovery receivable represents the recovery of the net book value of fixed assets that have been written off.

NOTE 9 RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 2007, the FASB ratified EITF Issue No. 06-11, “Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards” (EITF 06-11). EITF 06-11 requires companies to recognize the income tax benefit realized from dividends or dividend equivalents that are charged to retained earnings and paid to employees for nonvested equity-classified employee share-based payment awards as an increase to additional paid-in capital. EITF 06-11 is effective for fiscal years beginning after December 15, 2007. We are evaluating the impact of EITF 06-11 on our financial statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS No. 159”) which provides companies with an option to report selected financial assets and liabilities at fair value. The standard’s objective is to reduce both complexity in accounting for financial instruments and the volatility in earnings caused by measuring related assets and liabilities differently. SFAS No. 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year beginning after November 15, 2007. With certain limitations, early adoption is permitted. We are continuing to evaluate the impact of this new statement on our financial statements.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”) which provides enhanced guidance for using fair value to measure assets and liabilities. SFAS 157 also requires expanded information about the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. The standard applies whenever other standards require (or permit) assets or liabilities to be measured at fair value. The standard does not expand the use of fair value in any new circumstances. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. We do not believe the adoption of SFAS No. 157 will have a material impact on our 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 SFAS 150 relating to measurement and classification provisions 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. Though we have certain limited life ventures that appear to meet the criteria for liability recognition, we do not believe that the adoption of the currently postponed provisions of SFAS No. 150, if required, will have a material impact on our financial statements.

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:

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• Retail and Other — includes the operation, development and management of retail and other rental property, primarily shopping centers

• Master Planned Communities — 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

The operating measure used to assess operating results for the business segments is Real Estate Property Net Operating Income (“NOI”) which represents the operating revenues of the properties less property operating expenses, exclusive of depreciation and amortization. Management believes that NOI provides useful information about a property’s operating performance.

The accounting policies of the segments are the same as those of the Company, except that we report 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 Real Estate Affiliates,” in our Consolidated Statements of Income and Comprehensive Income. This difference affects only the reported revenues and operating expenses of the segments and has no effect on our reported net earnings. In addition, other revenues include the NOI of discontinued operations and is reduced by the NOI attributable to our minority interest partners in consolidated joint ventures.

The total expenditures for additions to long-lived assets for the Master Planned Communities segment is reflected as Land development and acquisitions expenditures in the cash provided by operating activities section of the Consolidated Statements of Cash Flows. Similarly, expenditures for long-lived assets for the Retail and Other segment is reflected in Acquisition/development of real estate and property additions/improvements in the cash flows from investing activities section of the Consolidated Statements of Cash Flows.

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Segment operating results are as follows:

	Three Months Ended June 30, 2007
	Consolidated			Unconsolidated			Segment
	Properties			Properties			Basis
(In thousands)
Retail and Other
Property revenues:
Minimum rents	$	443,432		$	112,053		$	555,485
Tenant recoveries		195,403			47,684			243,087
Overage rents		10,876			1,467			12,343
Other, including minority interest		24,897			23,197			48,094
Total property revenues		674,608			184,401			859,009
Property operating expenses:
Real estate taxes		55,089			14,392			69,481
Repairs and maintenance		47,918			10,640			58,558
Marketing		10,713			2,874			13,587
Other property operating costs		97,609			40,796			138,405
Provision for doubtful accounts		(1,701	)		397			(1,304	)
Total property operating expenses		209,628			69,099			278,727
Retail and other net operating income		464,980			115,302			580,282
Master Planned Communities
Land sales		36,130			22,661			58,791
Land sales operations		(29,542	)		(14,766	)		(44,308	)
Master Planned Communities net operating income		6,588			7,895			14,483
Real estate property net operating income	$	471,568		$	123,197		$	594,765

	Three Months Ended June 30, 2006
	Consolidated			Unconsolidated			Segment
(In thousands)	Properties			Properties			Basis
Retail and Other
Property revenues:
Minimum rents	$	425,052		$	103,691		$	528,743
Tenant recoveries		190,733			45,886			236,619
Overage rents		8,603			1,387			9,990
Other, including minority interest		23,282			19,065			42,347
Total property revenues		647,670			170,029			817,699
Property operating expenses:
Real estate taxes		54,551			14,643			69,194
Repairs and maintenance		48,762			10,441			59,203
Marketing		11,639			2,958			14,597
Other property operating costs		90,412			34,509			124,921
Provision for doubtful accounts		7,106			817			7,923
Total property operating expenses		212,470			63,368			275,838
Retail and other net operating income		435,200			106,661			541,861
Master Planned Communities
Land sales		33,035			20,250			53,285
Land sales operations		(25,102	)		(15,531	)		(40,633	)
Master Planned Communities net operating income		7,933			4,719			12,652
Real estate property net operating income	$	443,133		$	111,380		$	554,513

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	Six Months Ended June 30, 2007
	Consolidated			Unconsolidated			Segment
(In thousands)	Properties			Properties			Basis
Retail and Other
Property revenues:
Minimum rents	$	879,474		$	221,219		$	1,100,693
Tenant recoveries		394,858			95,944			490,802
Overage rents		26,456			3,934			30,390
Other, including minority interest		48,446			44,655			93,101
Total property revenues		1,349,234			365,752			1,714,986
Property operating expenses:
Real estate taxes		111,949			29,521			141,470
Repairs and maintenance		98,891			21,761			120,652
Marketing		23,294			6,246			29,540
Other property operating costs		197,645			81,643			279,288
Provision for doubtful accounts		3,791			1,248			5,039
Total property operating expenses		435,570			140,419			575,989
Retail and other net operating income		913,664			225,333			1,138,997
Master Planned Communities
Land sales		59,923			36,022			95,945
Land sales operations		(49,686	)		(22,461	)		(72,147	)
Master Planned Communities net operating income		10,237			13,561			23,798
Real estate property net operating income	$	923,901		$	238,894		$	1,162,795

	Six Months Ended June 30, 2006
	Consolidated			Unconsolidated			Segment
(In thousands)	Properties			Properties			Basis
Retail and Other
Property revenues:
Minimum rents	$	862,784		$	209,020		$	1,071,804
Tenant recoveries		376,176			92,453			468,629
Overage rents		22,829			3,735			26,564
Other, including minority interest		44,648			41,095			85,743
Total property revenues		1,306,437			346,303			1,652,740
Property operating expenses:
Real estate taxes		109,515			29,509			139,024
Repairs and maintenance		95,817			20,998			116,815
Marketing		23,669			6,464			30,133
Other property operating costs		176,860			72,479			249,339
Provision for doubtful accounts		13,319			908			14,227
Total property operating expenses		419,180			130,358			549,538
				��
Retail and other net operating income		887,257			215,945			1,103,202
Master Planned Communities
Land sales		170,255			38,799			209,054
Land sales operations		(123,699	)		(27,950	)		(151,649	)
Master Planned Communities net operating income		46,556			10,849			57,405
Real estate property net operating income	$	933,813		$	226,794		$	1,160,607

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The following reconciles real estate property net operating income (“NOI”) to GAAP-basis operating income and net income:

	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands)	2007			2006			2007			2006
Real estate property net operating income
Segment basis	$	594,765		$	554,513		$	1,162,795		$	1,160,607
Unconsolidated Properties		(123,197	)		(111,380	)		(238,894	)		(226,794	)
Consolidated Properties		471,568			443,133			923,901			933,813
Management and other fees		26,348			24,650			53,920			53,362
Property management and other costs		(56,447	)		(44,569	)		(109,589	)		(89,629	)
General and administrative		(4,030	)		(3,848	)		(16,299	)		(9,007	)
Depreciation and amortization		(163,289	)		(178,372	)		(338,408	)		(343,718	)
Minority interest in NOI of Consolidated Properties and other		2,996			4,454			5,798			8,374
Operating income		277,146			245,448			519,323			553,195
Interest income		2,944			1,469			4,977			4,690
Interest expense		(275,547	)		(278,611	)		(543,896	)		(557,404	)
Benefit (provision) for income taxes		(17,647	)		(14,490	)		270,744			(40,894	)
Minority interest		(5,085	)		(638	)		(59,502	)		(11,862	)
Equity in income of Unconsolidated Real Estate Affiliates		26,581			21,009			46,940			49,476
Net income (loss)	$	8,392		$	(25,813	)	$	238,586		$	(2,799	)

The following reconciles segment revenues to GAAP-basis consolidated revenues:

	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands)	2007			2006			2007			2006
Segment basis total property revenues	$	859,009		$	817,699		$	1,714,986		$	1,652,740
Unconsolidated segment revenues		(184,401	)		(170,029	)		(365,752	)		(346,303	)
Consolidated land sales		36,130			33,035			59,923			170,255
Management and other fees		26,348			24,650			53,920			53,362
Minority interest in NOI of Consolidated Properties and other		2,996			4,454			5,798			8,374
GAAP-basis consolidated total revenues	$	740,082		$	709,809		$	1,468,875		$	1,538,428

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

All references to numbered Notes are to specific footnotes to our Consolidated Financial Statements included in this Quarterly Report and which descriptions 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 or in our Annual Report.

FORWARD-LOOKING INFORMATION

We may make forward-looking statements in this Quarterly Report, in other reports 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”), Core FFO, capital expenditures, income tax liabilities, dividends, leverage, capital structure or other financial items

• Descriptions of plans or objectives of our management for future operations, including pending acquisitions, debt repayment or restructuring, and development/redevelopment activities

• Forecasts of our future economic performance

• 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 development spending

• Expected sales in our Master Planned Communities segment

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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,” “should,” “will,” “would” or similar expressions. Forward-looking statements should not be unduly relied upon. They give 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 our Annual Report, which factors are incorporated herein by reference. Any factor 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 or in our Annual Report that could cause results to differ from our expectations.

Overview

Our primary business is acquiring, owning, managing, leasing and developing retail rental property, primarily shopping centers. The majority of our properties are located in the United States, but we also have retail operations and property management activities, through unconsolidated joint ventures, in Brazil and Turkey. Our Master Planned Communities 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.

Net income for the three months ended June 30 was $8.4 million in 2007 as compared to a loss of $25.8 million in 2006. A $38.4 million increase in our Retail and Other segment revenues was partially offset by lower NOI in our Master Planned Communities segment.

Retail operating metrics continued to show signs of strength. Sales per square foot (on a trailing twelve month basis) increased 2.2% over the second quarter of 2006 to $458. Occupancy in our Retail Company Portfolio increased to 92.9% at June 30, 2007, compared to 91.2% at June 30, 2006.

In our Master Planned Community segment, the sales pace of land for standard residential lots has declined in recent months. We expect this trend to continue until the housing market stabilizes and national home builders resume capital investments. Although sales have declined for standard residential lots, custom home lots continue to sell in Summerlin due to the limited availability of land suitable to such custom lots combined with the desirability of living in the Summerlin community.

Effective January 1, 2007, Rouse Property Management, Inc., a taxable REIT subsidiary of TRCLP, was merged into GGMI, a taxable REIT subsidiary (“TRS”) of GGPLP. The transfer combines substantially all of our domestic management activities into a single TRS, but is not expected to have a significant impact on our results of operations.

We also restructured an additional TRS effective March 31, 2007. Through a series of transactions, a private REIT owned by GGPLP was contributed to TRCLP and that additional TRS became a qualified REIT subsidiary of that private REIT. This transaction resulted in approximately a $330 million decrease in our net deferred tax liabilities, an approximate $30 million increase in our current taxes payable and an approximate $300 million income tax benefit related to the properties now owned by that private REIT.

Acquisition activity was not significant during the six months ended June 30, 2007 and included primarily the acquisition of minority ownership interest in two operating properties for a purchase price of approximately $13 million, four former Mervyn’s department stores for an aggregate purchase price of approximately $18 million, and approximately $72 million in additional investment in our Brazilian joint venture.

Development activity remained strong in the quarter. As of June 30, 2007, we had eight redevelopment projects under construction each with budgeted projected expenditures in excess of $25 million, 16 new development projects under construction and ten additional planned developments. Developments in Progress per our consolidated balance sheet, plus our share of Unconsolidated Properties, was approximately $1.3 billion at June 30, 2007. Future approved development spending is approximately $1.8 billion and is expected to be expended between 2007 and 2010.

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The acquisition of the fifty percent interest of the GGP/Homart I portfolio (Note 3) is expected to have an approximately neutral impact on future earnings as the increased net income from the additional ownership in the properties is expected to be offset by a reduction of fees for development, asset management and leasing in addition to an increase in interest expense related to the additional debt obtained for the acquisition.

Seasonality

Although we have a year-long temporary leasing program, occupancies for short-term tenants and, therefore, rental income recognized, are higher during the second half of the year. 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, revenue production is generally highest in the fourth quarter of each year.

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. Our critical accounting policies as discussed in our Annual Report have not changed during 2007 and such policies are incorporated herein by reference.

Results of Operations

Three Months Ended June 30, 2007 and 2006

We have presented the following discussion of our results of operations on a segment basis under the proportionate share 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. In addition, other revenues are increased by the real estate net operating income of discontinued operations, if applicable, and are reduced by our consolidated minority interest venturers’ share of real estate net operating income. See Note 10 for additional information including reconciliations of our segment basis results to GAAP basis results.

Retail and Other Segment

The following table compares segment basis revenue and expense items for the three months ended June 30, 2007 and 2006:

	Three Months Ended
	June 30,
						$ Increase			% Increase
(In thousands)	2007			2006		(Decrease)			(Decrease)
Property revenues:
Minimum rents	$	555,485		$	528,743	$	26,742			5.1	%
Tenant recoveries		243,087			236,619		6,468			2.7
Overage rents		12,343			9,990		2,353			23.6
Other		48,094			42,347		5,747			13.6
Total property revenues		859,009			817,699		41,310			5.1
Property operating expenses:
Real estate taxes		69,481			69,194		287			0.4
Repairs and maintenance		58,558			59,203		(645	)		(1.1	)
Marketing		13,587			14,597		(1,010	)		(6.9	)
Other property operating costs		138,405			124,921		13,484			10.8
Provision for doubtful accounts		(1,304	)		7,923		(9,227	)		(116.5	)
Total property operating expenses		278,727			275,838		2,889			1.0
Real estate property net operating income	$	580,282		$	541,861	$	38,421			7.1	%

Minimum rents increased compared to the three months ended June 30, 2006 primarily due to higher effective rents and higher retail center occupancy. The increase was partially offset by a decrease in straight-line rent. In addition,

29

GENERAL GROWTH PROPERTIES, INC.

redevelopment activities had a negative impact on our minimum rents as space which is being redeveloped, even though it may be leased, did not generate revenue in the current quarter.

Tenant recoveries increased primarily as a result of higher operating costs, as discussed below, that are substantially recoverable from our tenants. Historically, our leases have included both a base rent component and a component which requires tenants to pay amounts related to all, or substantially all, of their share of real estate taxes and certain property operating expenses, including common area maintenance and insurance. The portion of these leases attributable to real estate tax and operating expense recoveries are recorded as “Tenant recoveries”. Recently, however, we have been structuring our new tenant leases such that, although these leases still contain a minimum rent and a tenant recovery component, a higher proportion of our rental revenues represent operating expense recoveries. This change has resulted in a shift between minimum rents and tenant recoveries.

The increase in overage rents is primarily attributable to The Grand Shoppes and Ala Moana Center as the result of increased sales compared to the second quarter 2006.

Other revenues include all other property revenues including vending, parking, sponsorship and advertising revenues, less NOI of minority interests in consolidated joint ventures. The increase in the second quarter 2007 is primarily due to an increase in advertising revenue across the portfolio and lower allocations to minority interests as a result of certain acquisitions of our minority interest partners’ ownership share in the fourth quarter of 2006.

Real estate taxes, marketing and repairs and maintenance expenses were comparable across substantially all of our properties.

Other property operating costs were higher in 2007 primarily due to a $4.6 million reduction in general liability reserves in 2006. In addition, operating costs increased $2.5 million as a result of an acquisition and the completion of a development property related to our Brazilian joint venture. Higher electric expense, security expense and insurance costs across the portfolio comprise the majority of the remaining increase.

The provision for doubtful accounts was negative in 2007 primarily due to the recognition of approximately $4.8 million as recovery of previously reserved tenant rents due to business interruption insurance recoveries at our Riverwalk investment property (Note 8). In addition, we reversed a $1.7 million reserve at one of our consolidated properties as the collectability of the amount due is now secured by a letter of credit. Reductions in provision for doubtful accounts across the retail portfolio contributed to the decrease.

Master Planned Communities Segment

	Three Months Ended
	June 30,
							$ Increase		% Increase
(In thousands)	2007			2006			(Decrease)		(Decrease)
Land sales	$	58,791		$	53,285		$	5,506		10.3	%
Land sales operations		(44,308	)		(40,633	)		3,675		9.0
Real estate property net operating income	$	14,483		$	12,652		$	1,831		14.5	%

Although land sales increased slightly for the three months ended June 30, 2007 as compared to June 30, 2006, the national housing market continues to be weak. Our two Houston communities, Bridgeland and Woodlands, continue to experience moderate demand and contributed to the slight increase in real estate property net operating income in 2007 as compared to 2006. Our share of real estate property net operating income for Woodlands increased to $7.9 million in 2007 from $4.7 million in 2006. Real estate property net operating income at Bridgeland also increased slightly. These increases were partially offset by decreases at our Summerlin and Maryland communities.

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GENERAL GROWTH PROPERTIES, INC.

The following table summarizes sales activities in our Master Planned Communities during the three months ended June 30, 2007 and 2006.

	Lot Sales and Pricing				Acreage
	Three Months Ended						Remaining
	June 30,				Total Gross		Saleable
	2007		2006		Acres		Acres
	($ in thousands)
Maryland Properties(1):
Residential:
Acres sold		0.7		1.3				227
Average price/acre	$	589	$	813
Commercial:
Acres sold		10.0		6.7				349
Average price/acre	$	507	$	443
Acreage						19,100		576
Summerlin(2):
Residential:
Acres sold		13.7		8.3				5,506
Average price/acre	$	1,142	$	1,618
Commercial:
Acres sold		1.6		0.9				883
Average price/acre	$	830	$	2,542
Acreage						22,500		6,389
Bridgeland:
Residential:
Acres sold		22.6		15.9				5,266
Average price/acre	$	244	$	207
Commercial:
Acres sold		—		—				1,211
Average price/acre	$	—	$	—
Acreage						10,200		6,477
Woodlands(3):
Residential:
Acres sold		90.1		81.3				1,660
Average price/acre	$	379	$	360
Commercial:
Acres sold		5.5		4.3				1,187
Average price/acre	$	540	$	909
Acreage						28,440		2,847

(1)	Maryland Properties includes Columbia and Fairwood.
(2)	Summerlin — Does not reflect impact of CSA (Note 8). Average price per acre includes assumption of Special Improvement District financing.
(3)	Woodlands — Shown at 100%. Our share of Woodlands is 52.5%.

Average Price per Acre can fluctuate widely, depending on location of the parcels within a community and the unit price and density of what is sold. The average price per acre does not include payments received under builders’ price participation agreements, where we may receive additional proceeds post-sale and record those revenues at that later date, based on the final selling price of the home. In some cases, these payments have been significant with respect to the initial lot price. In addition, there will be other timing differences between lot sales and reported revenue due to timing of revenue recognition under generally accepted accounting principles. The above pricing data also does not reflect the impact of income taxes and the CSA (Note 8), which can have a material impact on results.

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GENERAL GROWTH PROPERTIES, INC.

Certain Significant Consolidated Revenues and Expenses

The following table compares major revenue and expense items for the three months ended June 30, 2007 and 2006:

	Three Months Ended
	June 30,
					$ Increase			% Increase
(In thousands)	2007		2006		(Decrease)			(Decrease)
Tenant rents	$	649,711	$	624,388	$	25,323			4.1	%
Land sales		36,130		33,035		3,095			9.4
Property operating expenses		209,628		212,470		(2,842	)		(1.3	)
Land sales operations		29,542		25,102		4,440			17.7
Management and other fees		26,348		24,650		1,698			6.9
Property management and other costs		56,447		44,569		11,878			26.7
General and administrative		4,030		3,848		182			4.7
Depreciation and amortization		163,289		178,372		(15,083	)		(8.5	)
Interest expense		275,547		278,611		(3,064	)		(1.1	)
Provision for income taxes		17,647		14,490		3,157			21.8

Changes in consolidated tenant rents (which includes minimum rents, tenant recoveries and overage rents), land sales, property operating expenses and land sales operations were attributable to the same items discussed above in our segment basis results.

Management and other fees, property management and other costs and general and administrative in the aggregate represent our costs of doing business and are generally not directly property-related costs. Management and other fees increased as a result of higher fees attributable to improved NOI at certain operating properties in the second quarter 2007. Property management and other costs increased primarily as a result of higher personnel and personnel-related costs in 2007. The increase was attributable to higher incentive compensation costs and an increase in the number of employees. The increase in general and administrative is attributable to higher senior management compensation expense, including higher stock option expense resulting from the acceleration of the vesting period for certain stock options (Note 6).

The decrease in depreciation and amortization is due to completed depreciation of broadband equipment and other shorter-lived assets acquired or developed in the period from 1998 to 2002 and a cumulative adjustment to the useful lives of certain assets.

The decrease in interest expense is primarily due to higher capitalized interest. As a result of the increase in our development activities, we capitalized more interest in the second quarter of 2007 than in the prior year quarter. As discussed in Note 4, we issued $1.55 billion of 3.98% Notes in April 2007. Proceeds from such issuance were used, among other things, to repay $850 million of corporate unsecured debt under the senior credit facility and approximately $400 million on our revolving credit facility. We incurred approximately $2.4 million of debt extinguishment costs primarily associated with the repayment of the corporate unsecured debt. In addition, we refinanced $2 billion of variable-rate debt with lower fixed-rate property debt in the third quarter of 2006. Even though these transactions reduced interest expense, the savings were substantially offset by higher average outstanding debt and higher interest rates on the remainder of our portfolio.

The increase in provision for income taxes was primarily the result of the recognition of potential interest expense and penalties related to unrecognized tax benefit recorded as the result of the adoption of FIN 48 (Note 5).

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GENERAL GROWTH PROPERTIES, INC.

Six Months Ended June 30, 2007 and 2006

Retail and Other Segment

The following table compares segment basis revenue and expense items for the six months ended June 30, 2007 and 2006:

	Six Months Ended
	June 30,
					$ Increase			% Increase
(In thousands)	2007		2006		(Decrease)			(Decrease)
Property revenues:
Minimum rents	$	1,100,693	$	1,071,804	$	28,889			2.7	%
Tenant recoveries		490,802		468,629		22,173			4.7
Overage rents		30,390		26,564		3,826			14.4
Other		93,101		85,743		7,358			8.6
Total property revenues		1,714,986		1,652,740		62,246			3.8
Property operating expenses:
Real estate taxes		141,470		139,024		2,446			1.8
Repairs and maintenance		120,652		116,815		3,837			3.3
Marketing		29,540		30,133		(593	)		(2.0	)
Other property operating costs		279,288		249,339		29,949			12.0
Provision for doubtful accounts		5,039		14,227		(9,188	)		(64.6	)
Total property operating expenses		575,989		549,538		26,451			4.8
Real estate property net operating income	$	1,138,997	$	1,103,202	$	35,795			3.2	%

Minimum rents increased slightly as compared to the six months ended June 30, 2006 as higher effective rents were substantially offset by lower lease termination income and the impact of redevelopment activities. Lease termination income in 2007 was $17.2 million lower than the six months ended June 30, 2006. Redevelopment activities also had a negative impact on our minimum rents as space which is being redeveloped, even though it may be leased, did not generate revenue in the current period.

Tenant recoveries increased primarily as a result of higher operating costs, as discussed below, that are substantially recoverable from our tenants.

Historically, our leases have included both a base rent component and a component which requires tenants to pay amounts related to all, or substantially all, of their share of real estate taxes and certain property operating expenses, including common area maintenance and insurance. The portion of these leases attributable to real estate tax and operating expense recoveries are recorded as “Tenant recoveries.” Recently, however, we have been structuring our new tenant leases such that a higher proportion of our rental revenues represent operating expense recoveries. This change has resulted in a shift between minimum rents and tenant recoveries.

The increase in overage rents is primarily attributed to Ala Moana Center and The Grand Canal Shoppes as the result of increased sales compared to 2006.

Other revenues include all other property revenues including vending, parking, sponsorship and advertising revenues, less NOI of minority interests in consolidated joint ventures. The increase in 2007 is primarily due to an increase in advertising revenue across the portfolio and lower allocations to minority interests as a result of certain acquisitions of our minority interest partners’ ownership share in the fourth quarter of 2006.

Real estate taxes were higher across substantially all of our properties. The increase in repairs and maintenance is primarily attributed to higher snow removal and cleaning costs across substantially all of our properties.

Other property operating costs were higher in 2007 primarily due to a $12.8 million reduction in general liability reserves in 2006. In addition, operating costs increased $3.9 million as a result of an acquisition and the completion

33

GENERAL GROWTH PROPERTIES, INC.

of a development property related to our Brazilian joint venture. Higher electric expense, security expense, employee and insurance costs across the portfolio contribute to the majority of the remaining increase.

The provision for doubtful accounts was substantially lower than the prior year, primarily due to the Riverwalk insurance recovery in addition to the three month activity discussed above.

Master Planned Communities Segment

	Six Months Ended
	June 30,
							$ Increase			% Increase
(In thousands)	2007			2006			(Decrease)			(Decrease)
Land sales	$	95,945		$	209,054		$	(113,109	)		(54.1	)%
Land sales operations		(72,147	)		(151,649	)		(79,502	)		(52.4	)
Real estate property net operating income	$	23,798		$	57,405		$	(33,607	)		(58.5	)%

As expected, land sales declined at all of our properties except Bridgeland, which began sales in the first quarter of 2006. We expect this trend to continue until the housing market stabilizes and national home builders resume capital investments. As a result of high inventories of unsold homes and land across the country, national home builders have reduced activity even in markets such as Summerlin and Houston where supply and demand have generally remained in equilibrium despite the weak national housing market.

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GENERAL GROWTH PROPERTIES, INC.

The following table summarizes sales activities in our Master Planned Communities during the six months ended June 30, 2007 and 2006.

	Lot Sales and Pricing					Acreage
	Six Months Ended							Remaining
	June 30,					Total Gross		Saleable
	2007		2006			Acres		Acres
	($ in thousands)
Maryland Properties(1):
Residential:
Acres sold		0.7		25.1					227
Average price/acre	$	589	$	1,006
Commercial:
Acres sold		19.0		6.7					349
Average price/acre	$	405	$	443
Acreage							19,100		576
Summerlin(2):
Residential:
Acres sold		17.2		112.2					5,506
Average price/acre	$	1,263	$	976
Commercial:
Acres sold		4.9		20.0					883
Average price/acre	$	1,055	$	142	(3)
Acreage							22,500		6,389
Bridgeland:
Residential:
Acres sold		41.5		27.8					5,266
Average price/acre	$	247	$	212
Commercial:
Acres sold		—		—					1,211
Average price/acre	$	—	$	—
Acreage							10,200		6,477
Woodlands(4):
Residential:
Acres sold		143.6		156.6					1,660
Average price/acre	$	374	$	353
Commercial:
Acres sold		12.1		18.0					1,187
Average price/acre	$	387	$	425
Acreage							28,400		2,847

(1)	Maryland Properties includes Columbia and Fairwood.
(2)	Summerlin — Does not reflect impact of CSA (Note 8). Average price per acre includes assumption of Special Improvement District financing.
(3)	Summerlin — Includes the effect of a single sale of a 19.1 acre parcel to a school at a price of $25 thousand per acre.
(4)	Woodlands — Shown at 100%. Our share of Woodlands is 52.5%.

Average Price per Acre can fluctuate widely, depending on location of the parcels within a community and the unit price and density of what is sold. The average price per acre does not include payments received under builders’ price participation agreements, where we may receive additional proceeds post-sale and record those revenues at that later date, based on the final selling price of the home. In some cases, these payments have been significant with respect to the initial lot price. In addition, there will be other timing differences between lot sales and reported revenue due to timing of revenue recognition under generally accepted accounting principles. The above pricing data also does not reflect the impact of income taxes and the CSA (Note 8), which can have a material impact on results.

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GENERAL GROWTH PROPERTIES, INC.

Certain Significant Consolidated Revenues and Expenses

The following table compares major revenue and expense items for the six months ended June 30, 2007 and 2006:

	Six Months Ended
	June 30,
						$ Increase			% Increase
(In thousands)	2007			2006		(Decrease)			(Decrease)
Tenant rents	$	1,300,788		$	1,261,789	$	38,999			3.1	%
Land sales		59,923			170,255		(110,332	)		(64.8	)
Property operating expenses		435,570			419,180		16,390			3.9
Land sales operations		49,686			123,699		(74,013	)		(59.8	)
Management and other fees		53,920			53,362		558			1.0
Property management and other costs		109,589			89,629		19,960			22.3
General and administrative		16,299			9,007		7,292			81.0
Depreciation and amortization		338,408			343,718		(5,310	)		(1.5	)
Interest expense		543,896			557,404		(13,508	)		(2.4	)
(Benefit) provision for income taxes		(270,744	)		40,894		311,638			762.1

Changes in consolidated tenant rents (which includes minimum rents, tenant recoveries and overage rents), land sales, property operating expenses and land sales operations were attributable to the same items discussed above in our segment basis results.

Management and other fees, property management and other costs and general and administrative in aggregate represent our costs of doing business and are generally not directly property-related costs. Management and other fees increased as a result of higher fees attributable to improved NOI at certain operating properties in 2007. Property management and other costs increased primarily as a result of higher personnel and personnel-related costs in 2007. The increase was attributable to higher incentive compensation costs and an increase in the number of employees. The increase in general and administrative is attributable to higher senior management compensation expense, including bonuses and higher stock option expense resulting from the acceleration of the vesting period for certain stock options (Note 6) in the first quarter 2007.

The decrease in depreciation and amortization is due to completed depreciation of broadband equipment and other shorter-lived assets acquired or developed in the period 1998 to 2002 and a cumulative adjustment to the useful lives of certain assets.

The decrease in interest expense is primarily due to higher capitalized interest. As a result of the increase in our development activities, we capitalized more interest in the first quarter of 2007 than in the prior year quarter. Additionally, we incurred lower debt extinguishment costs in the first quarter of 2007 as a result of reduced refinancing activity. As previously discussed, we amended the senior unsecured credit facility and reduced the rate by approximately 60 basis points in the first quarter of 2006 and refinanced $2 billion of variable-rate debt with lower fixed-rate property debt in the third quarter of 2006. Even though these transactions reduced interest expense, the savings were more than offset by higher average outstanding debt and higher interest rates on the remainder of our portfolio.

Substantially all of the change in the benefit (provision) for income taxes is attributable to an internal restructuring of certain of our operating properties that were previously owned by TRS entities. This restructuring resulted in a net $297 million reduction in our income tax provision. Also impacting the change was the recognition of potential interest expense and penalties related to unrecognized tax benefit recorded as the result of the adoption of FIN 48.

Liquidity and Capital Resources

Cash Flows from Operating Activities

Net cash provided by operating activities was $237.8 million in the six months ended June 30, 2007 and $335.7 million in the six months ended June 30, 2006.

The decrease in total operating income is primarily due to lower net operating income in our Master Planned Communities segment. Land development and acquisitions expenditures, which are related to our Master Planned Communities segment, were $84.0 million in 2007 and $103.4 million in 2006. These expenditures will vary from year to year based on the pace of development and expected sales. As discussed above, demand at our Summerlin, Columbia

36

GENERAL GROWTH PROPERTIES, INC.

and Fairwood projects declined in 2006 and this trend continued into the six months ended 2007. As a result, land development and acquisitions expenditures declined in 2007.

Net cash provided by (used in) for working capital needs totaled ($14.2) million in 2007 and $8.0 million in 2006. The cash used for working capital needs for the six months ended June 30, 2007 is primarily the result of timing differences experienced in the payment of accounts payable and accrued expenses.

Cash Flows from Investing Activities

Net cash used in investing activities was $575.0 million in the six months ended June 30, 2007 and $169.1 million in the six months ended June 30, 2006.

Net investing cash provided by (used in) our Unconsolidated Real Estate Affiliates was ($151.7) million in 2007 and $83.2 million in 2006. The reduction in net cash is primarily attributed to decreased distributions in 2007 compared to 2006, resulting from the timing of distributions from one of our joint ventures. In addition, certain joint ventures retained cash and invested additional capital, including amounts from partners, to fund operations, new development and redevelopment activities and therefore did not have excess cash for distributions. We also received a distribution from one of our joint ventures in 2006.

Cash used for acquisition/development of real estate and property additions/improvements was $423.1 million in 2007 and $276.3 million in 2006. Expenditures in both years were primarily related to development and redevelopment activity. As of June 30, 2007, we had eight major approved redevelopment projects under construction (each with budgeted projected expenditures, at our ownership share, in excess of $25 million) and 16 new retail center development projects under construction. Developments in Progress per the balance sheet, plus our share of Unconsolidated Properties, totaled $1.3 billion at June 30, 2007. Included in such activity for the six months ended June 30, 2007 is approximately $9 million of land that was transferred from operating land. Future approved development spending is $1.8 billion which is expected to be expended between 2007 and 2010. We also have ten potential new retail or mixed-use developments.

Cash Flows from Financing Activities

Net cash provided by (used in) financing activities was $320.1 million in the six months ended June 30, 2007 and ($188.9) million in the six months ended June 30, 2006.

Distributions to common stockholders, holders of Common Units and holders of perpetual and convertible preferred units totaled $275.0 million in 2007 and $249.2 million in 2006. Dividends paid per common share were $0.90 in the six months ended June 30, 2007 and $0.82 in the six months ended June 30, 2006.

New financings exceeded principal payments by $719.9 million in 2007 and by $139.8 million in 2006. The net financing activity in 2007 reflects draws and repayments on the revolving credit facility as well as the issuance of the $1.55 billion Notes offering. In the first quarter of 2006, we refinanced the initial TRCLP acquisition funding. The decrease in deferred finance costs is attributable to the reduction in refinancing activity in 2007 compared to 2006.

REIT Requirements

In order to remain qualified as a real estate investment trust for federal income tax purposes, we must distribute or pay tax on 100% of our capital gains and at least 90% of our ordinary taxable income to stockholders. In determining distributions, the Board of Directors considers operating cash flow.

We anticipate that our operating cash flow and potential new debt or equity will provide adequate liquidity to conduct our operations, fund general and administrative expenses, fund operating costs and interest payments and allow distributions to our stockholders in accordance with the requirements of the Code. Certain properties are subject to financial performance covenants, primarily debt service coverage ratios. We believe we are in compliance with all such covenants as of June 30, 2007.

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GENERAL GROWTH PROPERTIES, INC.

Recently Issued Accounting Pronouncements

As described in Note 9, new accounting pronouncements have been issued which are effective for the current or subsequent year.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no significant changes in the market risks described in our Annual Report.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure 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. Such disclosure controls and procedures are designed 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 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.

Changes in Internal Control Over Financial Reporting

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

Neither the Company nor any of the Unconsolidated Real Estate Affiliates is currently involved in any material pending legal proceedings nor, to our knowledge, is any material legal proceeding currently threatened against the Company or any of the Unconsolidated Real Estate Affiliates.

ITEM 1A. RISK FACTORS

There has been no material changes in the Risk Factors previously disclosed in our Annual Report.

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GENERAL GROWTH PROPERTIES, INC.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities⁽¹⁾

					Total Number		Approximate
					of Shares		Dollar Value
					Purchased		of Shares that
					as Part of		May Yet be
	Total		Average		Publicly		Purchased
	Number of		Price		Announced		Under the
	Shares		Paid		Plans or		Plans or
Period	Purchased		per Share		Programs		Programs
June 8-25, 2007		1,806,900	$	52.93		1,806,900	$	104,352,038
Total		1,806,900	$	52.93		1,806,900	$	104,352,038

⁽¹⁾ On August 3, 2005, we announced that our Board of Directors had authorized, effective immediately, a $200 million per fiscal year common stock repurchase program. Stock repurchases under this program are made through open market or privately negotiated transactions through 2009, unless the program is earlier terminated. The repurchase program gives us the ability to acquire some or all of the shares of common stock to be issued upon the exercise of certain employee stock options and pursuant to the CSA.

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 15, 2007, the stockholders voted on the matters listed below. A total of 244,857,043 shares were eligible to vote on each matter presented at the Annual Meeting.

		Number of
	Matter	Shares For	Withheld
1.	(a) Election of John Bucksbaum	222,511,258		3,724,571
	(b) Election of Alan Cohen	223,240,260		2,995,569
	(c) Election of Anthony Downs	222,693,786		3,542,043

Matthew Bucksbaum, Bernard Freibaum, Adam Metz, Robert Michaels, Thomas Nolan, John Riordan and Beth Stewart all continue as directors of the Company.

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GENERAL GROWTH PROPERTIES, INC.

			Number of	Number
		Number of Shares	Shares	of Shares	Broker Non-
	Matter	For	Against	Abstain	Votes
2.	Amendment and Restatement of the Company’s Employee Stock Purchase Plan to provide for an additional 1,500,000 shares to be available for issuance, permit all issuances under the Plan to be effective electronically, change the waiting periods for employees to begin participation, and change the procedures regarding the administrative mechanics of participating in the Plan.	208,155,103	784,271	263,352		17,033,103
			Number of	Number
		Number of Shares	Shares	of Shares	Broker Non-
	Matter	For	Against	Abstain	Votes
3.	Ratification of the selection of Deloitte & Touche LLP as the Company’s independent public accountants for the year ending December 31, 2007.	226,030,056	125,694	80,079		0
			Number of	Number
		Number of Shares	Shares	of Shares	Broker Non-
	Matter	For	Against	Abstain	Votes
4.	Stockholder proposal regarding declassification of the Board of Directors.	162,505,136	46,102,793	594,797		17,033,103

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GENERAL GROWTH PROPERTIES, INC.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

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	Financial Statements of TRCLP, a subsidiary of GGPLP.

Pursuant to Item 601(b)(4)(v) of Regulation S-K, the registrant has not filed debt instruments relating to long-term debt that is not registered and for which the total amount of securities authorized thereunder does not exceed 10% of total assets of the registrant and its subsidiaries on a consolidated basis as of June 30, 2007. The registrant agrees to furnish a copy of such agreements to the SEC upon request.

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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, 2007	by:	/s/: Bernard Freibaum
		Bernard Freibaum
		Executive Vice President and Chief Financial Officer (On behalf of the Registrant and as Principal Accounting Officer)

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EXHIBIT INDEX

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	Financial Statements of TRCLP, a subsidiary of GGPLP.

Pursuant to Item 601(b)(4)(v) of Regulation S-K, the registrant has not filed debt instruments relating to long-term debt that is not registered and for which the total amount of securities authorized thereunder does not exceed 10% of total assets of the registrant and its subsidiaries on a consolidated basis as of June 30, 2007. The registrant agrees to furnish a copy of such agreements to the SEC upon request.

43