10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

xQuarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2012

oTransition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition Period from              to             

COMMISSION FILE NUMBER 1-34948

GENERAL GROWTH PROPERTIES, INC.

(Exact name of registrant as specified in its charter)

Delaware	27-2963337
(State or other jurisdiction of	(I.R.S. Employer
incorporating or organization)	Identification Number)

110 N. Wacker Dr., Chicago, IL	60606
(Address of principal executive offices)	(Zip Code)

(312) 960-5000

(Registrant’s telephone number, including area code)

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. x Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes x No

Indicate by checkmark whether  the Registrant has filed all documents and reports required to be filed by Sections 12,13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. x Yes o No

The number of shares of Common Stock, $.01 par value, outstanding on November 1, 2012 was 938,881,500.

GENERAL GROWTH PROPERTIES, INC.

INDEX

			PAGE
			NUMBER
Part I	FINANCIAL INFORMATION
	Item 1:	Consolidated Financial Statements (Unaudited)
		Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011	3
		Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2012 and 2011	4
		Consolidated Statements of Equity for the nine months ended September  30, 2012 and 2011	5
		Consolidated Statements of Cash Flows for the nine months ended September  30, 2012 and 2011	6
	Notes to Consolidated Financial Statements (Unaudited)		8
		Note 1: Organization	8
		Note 2: Summary of Significant Accounting Policies	9
		Note 3: Acquisitions and Intangibles	13
		Note 4: Dispositions, Discontinued Operations and Gains (Losses) on Dispositions of Interests in Operating Properties	14
		Note 5: Unconsolidated Real Estate Affiliates	15
		Note 6: Mortgages, Notes and Loans Payable	17
		Note 7: Income Taxes	19
		Note 8: Warrant Liability	19
		Note 9: Equity and Redeemable Noncontrolling Interests	21
		Note 10: Earnings Per Share	23
		Note 11: Stock-Based Compensation Plans	24
		Note 12: Prepaid Expenses and Other Assets	25
		Note 13: Accounts Payable and Accrued Expenses	26
		Note 14: Litigation	26
		Note 15: Commitments and Contingencies	27
		Note 16: Subsequent Events	27
	Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
		Liquidity and Capital Resources	33
	Item 3:	Quantitative and Qualitative Disclosures about Market Risk	39
	Item 4:	Mine Safety Disclosures	40
	Item 5:	Controls and Procedures	40
Part II	OTHER INFORMATION
	Item 1:	Legal Proceedings	40
	Item 1A:	Risk Factors	41
	Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	41
	Item 3:	Defaults Upon Senior Securities	41
	Item 5:	Other Information	41
	Item 6:	Exhibits	41
	SIGNATURE		43
	EXHIBIT INDEX		44

2

GENERAL GROWTH PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	September 30,			December 31,
	2012			2011
	(Dollars in thousands, except share amounts)
Assets:
Investment in real estate:
Land	$	4,303,329		$	4,623,944
Buildings and equipment	18,847,928			19,837,750
Less accumulated depreciation	(1,286,753		)	(974,185		)
Construction in progress	383,977			135,807
Net property and equipment	22,248,481			23,623,316
Investment in and loans to/from Unconsolidated Real Estate Affiliates	2,717,079			3,052,973
Net investment in real estate	24,965,560			26,676,289
Cash and cash equivalents	637,946			572,872
Accounts and notes receivable, net	243,503			218,749
Deferred expenses, net	176,377			170,012
Prepaid expenses and other assets	1,398,494			1,805,535
Assets held for disposition	—			74,694
Total assets	$	27,421,880		$	29,518,151
Liabilities:
Mortgages, notes and loans payable	$	16,074,015		$	17,143,014
Accounts payable and accrued expenses	1,271,364			1,445,738
Dividend payable	106,312			526,332
Deferred tax liabilities	22,520			29,220
Tax indemnification liability	303,750			303,750
Junior Subordinated Notes	206,200			206,200
Warrant liability	1,399,043			985,962
Liabilities held for disposition	—			74,795
Total liabilities	19,383,204			20,715,011
Redeemable noncontrolling interests:
Preferred	134,531			120,756
Common	132,020			103,039
Total redeemable noncontrolling interests	266,551			223,795
Commitments and Contingencies	—			—
Redeemable Preferred Stock: as of September 30, 2012 and December 31, 2011, $0.01 par value, 500,000 shares authorized, none issued and outstanding	—			—
Equity:
Common stock: as of September 30, 2012, $0.01 par value, 11,000,000,000 shares authorized and 938,619,521 shares issued and outstanding; as of December 31, 2011, $0.01 par value, 11,000,000,000 shares authorized and 935,307,487 shares issued and outstanding	9,387			9,353
Additional paid-in capital	10,417,657			10,405,318
Retained earnings (accumulated deficit)	(2,661,759		)	(1,883,569		)
Accumulated other comprehensive loss	(82,026		)	(47,773		)
Total stockholders’ equity	7,683,259			8,483,329
Noncontrolling interests in consolidated real estate affiliates	88,866			96,016
Total equity	7,772,125			8,579,345
Total liabilities and equity	$	27,421,880		$	29,518,151

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

3

GENERAL GROWTH PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
	(Dollars in thousands, except per share amounts)
Revenues:
Minimum rents	$	401,259		$	383,541		$	1,175,365		$	1,158,479
Tenant recoveries	184,869			189,942			542,784			547,157
Overage rents	12,835			12,823			34,230			29,291
Management fees and other corporate revenues	17,823			14,188			55,646			43,775
Other	16,387			16,488			49,802			47,357
Total revenues	633,173			616,982			1,857,827			1,826,059
Expenses:
Real estate taxes	59,258			56,530			174,797			173,898
Property maintenance costs	18,758			21,419			62,102			71,128
Marketing	8,085			7,639			22,497			19,937
Other property operating costs	101,890			107,631			286,170			290,629
Provision for doubtful accounts	1,370			1,078			3,097			2,295
Property management and other costs	38,903			45,455			119,350			137,517
General and administrative	10,045			15,441			31,675			18,067
Provision for impairment	98,288			—			98,288			—
Depreciation and amortization	208,833			226,360			612,188			675,536
Total expenses	545,430			481,553			1,410,164			1,389,007
Operating income	87,743			135,429			447,663			437,052
Interest income	766			680			2,307			1,912
Interest expense	(204,917		)	(218,932		)	(607,915		)	(672,936		)
Warrant liability adjustment	(123,381		)	337,781			(413,081		)	319,460
Gain from change in control of investment properties	—			—			18,547			—
Loss before income taxes, equity in income (loss) of Unconsolidated Real Estate Affiliates, discontinued operations and allocation to noncontrolling interests	(239,789		)	254,958			(552,479		)	85,488
Provision for income taxes	(2,449		)	(3,954		)	(5,553		)	(7,882		)
Equity in income (loss) of Unconsolidated Real Estate Affiliates	22,054			9,833			39,849			(2,534		)
Income (loss) from continuing operations	(220,184		)	260,837			(518,183		)	75,072
Discontinued operations	13,576			(4,276		)	10,982			(13,688		)
Net (loss) income	(206,608		)	256,561			(507,201		)	61,384
Allocation to noncontrolling interests	(1,279		)	(4,511		)	(6,236		)	(6,718		)
Net (loss) income attributable to common stockholders	$	(207,887	)	$	252,050		$	(513,437	)	$	54,666
Basic Earnings (Loss) Per Share:
Continuing operations	$	(0.24	)	$	0.27		$	(0.56	)	$	0.07
Discontinued operations	0.01			—			0.01			(0.01		)
Total basic earnings (loss) per share	$	(0.23	)	$	0.27		$	(0.55	)	$	0.06
Diluted Loss Per Share:
Continuing operations	$	(0.24	)	$	(0.08	)	$	(0.56	)	$	(0.26	)
Discontinued operations	0.01			—			0.01			(0.01		)
Total diluted loss per share	$	(0.23	)	$	(0.08	)	$	(0.55	)	$	(0.27	)
Dividends declared per share	$	0.11		$	0.10		$	0.31		$	0.30
Comprehensive Income (Loss), Net:
Net (loss) income	$	(206,608	)	$	256,561		$	(507,201	)	$	61,384
Other comprehensive loss:
Net unrealized losses on financial instruments	—			—			—			(1		)
Foreign currency translation	(842		)	(85,935		)	(35,202		)	(43,055		)
Unrealized gains (losses) on available-for-sale securities	606			(8		)	716			(3		)
Other comprehensive loss	(236		)	(85,943		)	(34,486		)	(43,059		)
Comprehensive (loss) income	(206,844		)	170,618			(541,687		)	18,325
Comprehensive loss allocated to noncontrolling interests	(1,284		)	(3,899		)	(6,003		)	(6,416		)
Comprehensive (loss) income, net attributable to common stockholders	$	(208,128	)	$	166,719		$	(547,690	)	$	11,909

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

4

GENERAL GROWTH PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(UNAUDITED)

							Retained						Noncontrolling
				Additional			Earnings			Accumulated Other			Interests in
	Common			Paid-In			(Accumulated			Comprehensive			Consolidated Real			Total
	Stock			Capital			Deficit)			Income (Loss)			Estate Affiliates			Equity
	(Dollars in thousands, except per share amounts)
Balance at January 1, 2011	$	9,419		$	10,681,586		$	(612,075	)	$	172		$	102,647		$	10,181,749
Net income (loss)							54,666						(600		)	54,066
Distributions to noncontrolling interests in consolidated Real Estate Affiliates													(4,759		)	(4,759		)
Issuance of common stock - payment of dividend (22,256,121 common shares)	223			(244		)	21									—
Restricted stock grant, net of forfeitures and compensation expense ((282,320) common shares)	(3		)	8,593												8,590
Stock options exercised (97,987 common shares)	1			488												489
Purchase and cancellation of common shares ((34,906,069) common shares)	(349		)	(388,445		)	(154,221		)							(543,015		)
Cash dividends reinvested (DRIP) in stock (4,846,784 common shares)	48			80,660												80,708
Other comprehensive loss										(42,757		)				(42,757		)
Cash distributions declared ($0.30 per share)				(16		)	(283,297		)							(283,313		)
Cash redemptions for common units in excess of carrying value				(648		)										(648		)
Adjustment for noncontrolling interest in operating partnership				12,984												12,984
Balance at September 30, 2011	$	9,339		$	10,394,958		$	(994,906	)	$	(42,585	)	$	97,288		$	9,464,094
Balance at January 1, 2012	$	9,353		$	10,405,318		$	(1,883,569	)	$	(47,773	)	$	96,016		$	8,579,345
Net loss							(513,437		)				(115		)	(513,552		)
Distributions to noncontrolling interests in consolidated Real Estate Affiliates													(7,035		)	(7,035		)
Restricted stock grant, net of forfeitures and compensation expense ((48,125) common shares)				6,632												6,632
Employee stock purchase program (98,076 common shares)	1			1,604												1,605
Stock options exercised (396,064 common shares)	4			7,557												7,561
Cash dividends reinvested (DRIP) in stock (2,866,019 common shares)	29			43,810												43,839
Other comprehensive loss										(34,253		)				(34,253		)
Cash distributions declared ($0.31 per share)							(290,797		)							(290,797		)
Cash redemptions for common units in excess of carrying value				(409		)										(409		)
Adjustment for noncontrolling interest in operating partnership				(46,855		)										(46,855		)
Adjustment to dividend for RPI Spin-Off							26,044									26,044
Balance at September 30, 2012	$	9,387		$	10,417,657		$	(2,661,759	)	$	(82,026	)	$	88,866		$	7,772,125

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

5

GENERAL GROWTH PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine Months Ended September 30,
	2012			2011
	(In thousands)
Cash Flows from Operating Activities:
Net (loss) income	$	(507,201	)	$	61,384
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Equity in (income) loss of Unconsolidated Real Estate Affiliates	(39,849		)	2,534
Distributions received from Unconsolidated Real Estate Affiliates	30,021			21,996
Provision for doubtful accounts	3,264			4,733
Depreciation and amortization	621,388			755,152
Amortization/write-off of deferred finance costs	3,576			1,925
Accretion/write-off of debt market rate adjustments	(42,446		)	(57,056		)
Amortization of intangibles other than in-place leases	79,504			104,691
Straight-line rent amortization	(51,049		)	(78,272		)
Gain on dispositions	(13,037		)	(1,822		)
Gain from change in control of investment properties	(18,547		)	—
Gain on extinguishment of debt	(9,911		)	—
Provisions for impairment	118,588			—
Warrant liability adjustment	413,081			(319,460		)
Net changes:
Accounts and notes receivable	31,041			(4,628		)
Prepaid expenses and other assets	(1,104		)	34,115
Deferred expenses	(34,838		)	(14,936		)
Restricted cash	62,652			15,681
Accounts payable and accrued expenses	(48,870		)	(123,001		)
Other, net	10,994			(7,234		)
Net cash provided by operating activities	607,257			395,802
Cash Flows from Investing Activities:
Acquisition/development of real estate and property additions/improvements	(584,246		)	(180,506		)
Proceeds from sales of investment properties	194,269			446,765
Proceeds from sales of investment in Unconsolidated Real Estate Affiliates	—			74,906
Contributions to Unconsolidated Real Estate Affiliates	(62,139		)	(55,999		)
Distributions received from Unconsolidated Real Estate Affiliates in excess of income	289,366			49,147
Decrease (increase) in restricted cash	6,195			(87,822		)
Net cash (used in) provided by investing activities	(156,555		)	246,491
Cash Flows from Financing Activities:
Proceeds from refinance/issuance of mortgages, notes and loans payable	3,892,525			2,145,848
Principal payments on mortgages, notes and loans payable	(4,022,632		)	(2,600,840		)
Deferred finance costs	(27,254		)	(20,032		)
Cash distributions paid to common stockholders	(281,089		)	(225,830		)
Cash distributions reinvested (DRIP) in common stock	43,839			80,708
Cash distributions paid to holders of common units	(1,543		)	(6,802		)
Purchase and cancellation of common shares	—			(543,015		)
Other, net	10,526			(952		)
Net cash used in financing activities	(385,628		)	(1,170,915		)
Net change in cash and cash equivalents	65,074			(528,622		)
Cash and cash equivalents at beginning of period	572,872			1,021,311
Cash and cash equivalents at end of period	$	637,946		$	492,689

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

6

GENERAL GROWTH PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(UNAUDITED)

	Nine Months Ended September 30,
	2012			2011
	(In thousands)
Supplemental Disclosure of Cash Flow Information:
Interest paid	$	631,844		$	719,903
Interest capitalized	780			1,704
Income taxes paid	2,598			8,222
Reorganization items paid	—			128,070
Third party property exchange	—			44,672
Non-Cash Transactions:
Change in accrued capital expenditures included in accounts payable and accrued expenses	$	1,170		$	(11,463	)
Debt payoffs via deeds in-lieu	—			161,524
Note receivable related to property sale	17,000			—
Rouse Properties, Inc. Dividend:
Adjustment to dividend for RPI Spin-off	(26,044		)	—
Non-Cash Distribution of RPI Spin-off:
Assets	1,554,486			—
Liabilities and equity	(1,554,486		)	—
Non-Cash Sale of Property to RPI:
Assets	63,672			—
Liabilities	(63,672		)	—
Non-Cash Acquisition of The Oaks and Westroads:
Assets	218,071			—
Liabilities and equity	(218,071		)	—
Decrease in assets and liabilities resulting from the contribution of a wholly owned mall into a newly formed unconsolidated joint venture
Assets	—			(336,744		)
Liabilities and equity	—			(238,126		)

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

7

GENERAL GROWTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

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, 2011 which are included in the Company’s annual report on Form 10-K (the “Annual Report”) for the fiscal year ended December 31, 2011, and as recast in the Form 8-K filed on June 27, 2012, (Commission File No. 1-34948), as certain footnote disclosures which would substantially duplicate those contained in our Annual Report have been omitted from this Quarterly 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”, the “Successor” or the “Company”), a Delaware corporation, was organized in July 2010 and is a self-administered and self-managed real estate investment trust, referred to as a “REIT”.  GGP is the successor registrant, by merger, on November 9, 2010 to GGP, Inc. (the “Predecessor”).  The Predecessor had filed for bankruptcy protection under Chapter 11 of Title 11 of the United States Code (“Chapter 11”) in the Southern District of New York on April 16, 2009 and emerged from bankruptcy, pursuant to a plan of reorganization (the “Plan”) on November 9, 2010.  In these notes, the terms “we,” “us” and “our” refer to GGP and its subsidiaries or, in certain contexts, the Predecessor and its subsidiaries.

GGP, through its subsidiaries and affiliates, operates, manages, develops and acquires retail and other rental properties, primarily regional malls, which are predominantly located throughout the United States. GGP also holds assets in Brazil through investments in Unconsolidated Real Estate Affiliates (as defined below).

Substantially all of our business is conducted through GGP Limited Partnership (the “Operating Partnership” or “GGPLP”).   GGPLP owns an interest in all retail and other rental properties that are part of the consolidated financial statements of GGP.  As of September 30, 2012, GGP holds approximately a 99% common equity ownership (without giving effect to the potential conversion of the Preferred Units as defined below) of the Operating Partnership, while the remaining 1% is held by limited partners that indirectly include family members of the original stockholders of the Predecessor and certain previous contributors of properties to the Operating Partnership.

The Operating Partnership also has preferred units of limited partnership interest (the “Preferred Units”) outstanding.  The terms of the Preferred Units provide that the Preferred Units are convertible into Common Units which then are redeemable for cash or, at our option, shares of GGP common stock (Note 9).

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

·GGP-TRC, LLC (“TRCLLC”), formerly known as The Rouse Company, LLC, which has ownership interests in certain Consolidated Properties and Unconsolidated Properties (each as defined below) and is the borrower of certain unsecured bonds (Note 6).

·General Growth Management, Inc. (“GGMI”), a taxable REIT subsidiary (a “TRS”), which manages, leases, and performs various services for some of our Unconsolidated Real Estate Affiliates (defined below).  GGMI also performs marketing and strategic partnership services at all of our Consolidated Properties.

In this Quarterly Report, we refer to our ownership interests in properties in which we own a majority or controlling interest and, as a result, are consolidated under accounting principles generally accepted in the United States of America (“GAAP”) as the “Consolidated Properties.”  We also hold some properties through joint venture entities in which we own a noncontrolling interest (“Unconsolidated Real Estate Affiliates”) and we refer to those properties as the “Unconsolidated Properties”.

8

GENERAL GROWTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

NOTE 2        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and 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 noncontrolling partner’s share of the assets, liabilities and operations of the joint ventures (generally computed as the joint venture partner’s ownership percentage) is included in noncontrolling interests in Consolidated Real Estate Affiliates as permanent equity of the Company. All significant intercompany balances and transactions have been eliminated.

We operate in a single reportable segment referred to as our retail and other segment, which includes the operation, development and management of retail and other rental properties, primarily regional malls.  Our portfolio of regional malls represents a collection of retail properties that are targeted to a range of market sizes and consumer tastes.  Each of our operating properties is considered a separate operating segment, as each property earns revenues and incurs expenses, individual operating results are reviewed and discrete financial information is available.  We do not distinguish or group our consolidated operations based on geography, size or type. Further, all material operations are within the United States and no customer or tenant comprises more than 10% of consolidated revenues.  As a result, the Company’s operating properties are aggregated into a single reportable segment.

The accompanying unaudited consolidated financial statements and related notes have been prepared in accordance with GAAP and in conformity with the rules and regulations of the SEC applicable to interim financial information. As such, certain information and footnote disclosures normally included in complete annual financial statements prepared in accordance with GAAP have been omitted in accordance with the rules and regulations of the SEC.

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 September 30, 2012 are not necessarily indicative of the results to be obtained for the full fiscal year.

Reclassifications

Certain prior period amounts in the consolidated financial statements have been reclassified to conform to the current period presentation as amounts included on the Consolidated Statements of Operations and Comprehensive Income (Loss) for properties sold have been reclassified to discontinued operations for all periods presented.

In addition, three properties previously classified as held for sale were reclassified as held for use in the first quarter of 2012.  These properties are presented within continuing operations for all periods presented in the accompanying consolidated financial statements (Note 4).

In addition, prior period disclosures related to the Consolidated Statements of Operations and Comprehensive Income (Loss) in the accompanying footnotes have been adjusted for the impacts of discontinued operations.

Transactions with Affiliates

Management fees and other corporate 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 are reported at 100% of the revenue earned from the joint venture in management fees and other corporate revenues on our Consolidated Statements of Operations and Comprehensive Income (Loss).  Our share of the management fee expense incurred by the Unconsolidated Real Estate Affiliates is reported within equity in income of Unconsolidated Real Estate Affiliates on our Consolidated Statements of Operations and Comprehensive Income (Loss) and in property management and other costs in the Condensed Combined Statements of Income in Note 5.  The following table summarizes the management fees from affiliates and our share of the management fee expense:

9

GENERAL GROWTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Management fees from affiliates	$	17,565		$	14,177		$	54,445		$	43,363
Management fee expense	(5,370		)	(5,441		)	(17,037		)	(16,171		)
Net management fees from affiliates	$	12,195		$	8,736		$	37,408		$	27,192

In connection with the spin-off of Rouse Properties, Inc. (“RPI Spin-Off”), we have entered into a Transition Services Agreement (“TSA”) with RPI.  In accordance with the TSA, we have agreed to provide legal and other services to RPI for established fees, which were not material for the three and nine months ended September 30, 2012.

Acquisitions of Operating Properties

Acquisitions of properties are accounted for utilizing the acquisition method of accounting and, accordingly, the results of operations of acquired properties were included in the results of operations from the respective dates of acquisition.  Estimates of future cash flows and other valuation techniques are used to allocate the purchase price of acquired property between land, buildings and improvements, equipment, debt liabilities assumed and identifiable intangible assets and liabilities such as amounts related to in-place tenant leases, acquired above and below-market tenant and ground leases and tenant relationships. No significant value had been ascribed to the tenant relationships (Note 3).

Impairment

Operating properties

Accounting for the impairment of long-lived assets requires that if impairment indicators exist and the undiscounted cash flows expected to be generated by an asset are less than its carrying amount, an impairment provision should be recorded to write down the carrying amount of such asset to its fair value.  We review our consolidated properties for potential impairment indicators whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

Impairment indicators are assessed separately for each property and include, but are not limited to, significant decreases in real estate property net operating income, significant decreases in occupancy percentage, debt maturities, management’s intent with respect to the properties and prevailing market conditions.

Impairment indicators for pre-development costs, which are typically costs incurred during the beginning stages of a potential development and construction in progress, are assessed by project and include, but are not limited to, significant changes in the Company’s plans with respect to the project, significant changes in projected completion dates, tenant demand, anticipated revenues or cash flows, development costs, market factors and sustainability of development projects.

If an indicator of potential impairment exists, the property is tested for recoverability by comparing its carrying amount to the estimated future undiscounted cash flows.  The cash flow estimates used both for determining recoverability and estimating fair value are inherently judgmental and reflect current and projected trends in rental, occupancy and capitalization rates, and estimated holding periods for the applicable properties.  Although the carrying amount may exceed the estimated fair value of certain properties, a real estate asset is only considered to be impaired when its carrying amount cannot be recovered through estimated future undiscounted cash flows.  To the extent an impairment provision is determined to be necessary, the excess of the carrying amount of the property over its estimated fair value is expensed to operations.  In addition, the impairment provision is allocated proportionately to adjust the carrying amount of the asset group.  The adjusted carrying amount, which represents the new cost basis of the property, is depreciated over the remaining useful life of the property.

Although we may market a property for sale, there can be no assurance that the transaction will be complete until the sale is finalized.  However, GAAP requires us to reduce the recoverability periods for these assets.  If we cannot recover the carrying value of these properties within the planned hold period, we will estimate the fair values of the assets and record impairment charges for properties in which the estimated fair value is less than their carrying value.

10

GENERAL GROWTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

We recorded impairment charges of $118.6 million on nine of our operating properties during the nine months ended September 30, 2012.  Of these impairment charges, $98.3 million related to seven of our operating properties and were recorded during the three months ended September 30, 2012.  These impairment charges are included in provision for impairment in our Consolidated Statements of Operations and Comprehensive Income (Loss).

During the three months ended September 30, 2012, three of the impairment charges related to regional malls that were transferred to the special servicer.  One of the properties was sold, in a lender directed sale in full satisfaction of the related debt, subsequent to September 30, 2012, for an amount less than the carrying value (Note 16).  Accordingly, we recorded an impairment charge of $11.1 million, resulting in a net book value of $15.2 million, which is less than the carrying value of the non-recourse debt of $64.9 million.  We expect to record a gain on extinguishment of debt of approximately $50 million in the fourth quarter of 2012.  We recorded impairment charges on the other two properties of $46.2 million, resulting in an aggregate net book value of $100.7 million, which is less than the aggregate carrying value of the non-recourse debt of $166.1 million.  These impairment charges were recorded because the estimated fair values of the properties, based on discounted cash flow analyses, were less than the carrying values of the properties.

The remaining four impairment charges recorded during the three months ended September 30, 2012, totaled $41.0 million and related to two regional malls and two small office buildings.  These impairment charges were recorded because the estimated sales prices of these properties were lower than their carrying values.  The estimated sales prices were based on negotiated sales prices finalized in the third quarter of 2012.

During the nine months ended September 30, 2012, we previously recorded two impairment charges that totaled $20.3 million and related to two regional malls as the sales prices of these properties were lower than their carrying values.  These properties were sold in the period in which the impairment was taken.  These impairment charges are included, net of the gain on forgiveness of debt of $9.9 million, in discontinued operations in our Consolidated Statements of Operations and Comprehensive Income (Loss).

Gains on disposition, including settlement of debt, are recorded in the Consolidated Statements of Operations and Comprehensive Income (Loss) in the period the property is disposed.  Impairment charges are recorded in the Consolidated Statements of Operations and Comprehensive Income (Loss) when the carrying value exceeds the estimated fair value of the property, which can occur in accounting periods preceding disposition and / or in the period of disposition.

No provisions for impairment were necessary for the three or nine months ended September 30, 2011.

Investment in Unconsolidated Real Estate Affiliates

According to the guidance related to the equity method of accounting for investments, a series of operating losses of an investee or other factors may indicate that an other-than-temporary decrease in value of our investment in the Unconsolidated Real Estate Affiliates has occurred. The investment in each of the Unconsolidated Real Estate Affiliates is evaluated periodically and as deemed necessary for valuation declines below the carrying amount. Accordingly, in addition to the property-specific impairment analysis that we perform for such joint ventures (as part of our operating property impairment process described above), we also considered whether there were other-than-temporary impairments with respect to the carrying values of our Unconsolidated Real Estate Affiliates.

We did not record any provisions for impairment related to our investments in Unconsolidated Real Estate Affiliates for the three and nine months ended September 30, 2012 and 2011.

General

Impairment charges could be taken in the future if economic conditions change or if the plans regarding our assets change.  Therefore, we can provide no assurance that material impairment charges with respect to our assets, including operating properties, construction in progress and investments in Unconsolidated Real Estate Affiliates,

11

GENERAL GROWTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

will not occur in future periods.  Accordingly, we will continue to monitor circumstances and events in future periods to determine whether further impairments are warranted.

Fair Value Measurements

The accounting principles for fair value measurements establish a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.  These tiers include:

·Level 1 - defined as observable inputs such as quoted prices for identical assets or liabilities in active markets;

·Level 2 - defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and

·Level 3 - defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The impairment section above includes a discussion of properties measured at fair value on a non recurring basis using Level 2 and Level 3 inputs.  Fair value of financial instruments below includes a discussion of the fair value of debt, which is estimated using Level 2 and Level 3 inputs.   Note 8 includes a discussion of the warrant liability which is estimated on a recurring basis using Level 3 inputs.

Fair Value of Operating Properties

The following table summarizes our assets that are measured at fair value on a nonrecurring basis as of September 30, 2012.

			Quoted Prices in
			Active Markets		Significant Other		Significant
	Total Fair Value		for Identical Assets		Observable Inputs		Unobservable Inputs
	Measurement		(Level 1)		(Level 2)		(Level 3)
Balance at September 30, 2012
Investments in real estate (1)	$	238,362	$	—	$	137,656	$	100,706

(1) Refer to the impairment section above for more information regarding impairment.

We estimate fair value relating to impairment assessments based upon discounted cash flow and direct capitalization models that include all projected cash inflows and outflows over a specific holding period, or the negotiated sales price, if applicable.  Such projected cash flows are comprised of contractual rental revenues and forecasted rental revenues and expenses based upon market conditions and expectations for growth. Capitalization rates and discount rates utilized in these models are based on a reasonable range of current market rates for each property analyzed.  Based upon these inputs, we determined that our valuations of properties using a discounted cash flow or a direct capitalization model were classified within Level 3 of the fair value hierarchy.  For our properties for which the estimated fair value was based on negotiated sales prices, we determined that our valuation was classified within Level 2 of the fair value hierarchy.

The following table summarizes provisions for impairment recorded in our Consolidated Statements of Operations and Comprehensive Income (Loss) as a result of changes in the fair value of our investments in real estate:

	Provisions for Impairment
	Three Months Ended September 30, 2012			Nine Months Ended September 30, 2012
Investments in real estate (1) (2)
Significant Other Observable Inputs (Level 2)	$	(52,048	)	$	(72,348	)
Significant Unobservable Inputs (Level 3)	(46,240		)	(46,240		)

(1) Refer to the impairment section above for more information regarding impairment.

(2) Certain of the properties impaired during the year have been subsequently sold.  As such, these impairment charges are included in discontinued operations in our Consolidated Statements of Operations and Comprehensive Income (Loss).

12

GENERAL GROWTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

The following table sets forth quantitative information about the unobservable inputs of our Level 3 real estate, which are recorded at fair value as of September 30, 2012:

Unobservable Quantitative Input	Range
Discount rates	9.0% to 10.0%
Terminal capitalization rates	9.0% to 10.0%

Fair Value of Financial Instruments

The fair values of our financial instruments approximate their carrying amount in our consolidated financial statements except for debt.  Management’s estimates of fair value are presented below for our debt as of September 30, 2012 and December 31, 2011.

	September 30, 2012				December 31, 2011
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Fixed-rate debt	$	14,246,457	$	15,338,267	$	14,795,370	$	14,978,908
Variable-rate debt	1,827,558		1,724,031		2,347,644		2,326,533
	$	16,074,015	$	17,062,298	$	17,143,014	$	17,305,441

The fair value of our Junior Subordinated Notes approximates their carrying amount as of September 30, 2012 and December 31, 2011.  We estimated the fair value of mortgages, notes and other loans payable using Level 2 and Level 3 inputs based on recent financing transactions, estimates of the fair value of the property that serves as collateral for such debt, historical risk premiums for loans of comparable quality, current London Interbank Offered Rate (“LIBOR”), U.S. treasury obligation interest rates and on the discounted estimated future cash payments to be made on such debt. The discount rates estimated reflect our judgment as to what the approximate current lending rates for loans or groups of loans with similar maturities and credit quality would be if credit markets were operating efficiently and assume that the debt is outstanding through maturity. We have utilized market information as available or present value techniques to estimate the amounts required to be disclosed.  Since such amounts are estimates that are based on limited available market information for similar transactions and do not acknowledge transfer or other repayment restrictions that may exist in specific loans, it is unlikely that the estimated fair value of any such debt could be realized by immediate settlement of the obligation.

NOTE 3        ACQUISITIONS AND INTANGIBLES

Acquisitions

During the nine months ended September 30, 2012, we acquired five anchor boxes, excluding the Sears anchor pads discussed below, for an aggregate purchase price of $26.3 million.

In addition, on April 17, 2012, we acquired 11 Sears anchor pads (including fee interests in five anchor pads and long-term leasehold interests in six anchor pads) for the purpose of redevelopment or remerchandising.  Total consideration paid was $270.0 million. The purchase price of $212.0 million for the leasehold interests was recorded in construction in progress, as the buy-out costs were necessary costs related to redevelopment projects at these properties, and the purchase price of $58.0 million for the fee interests was recorded in land and building in our Consolidated Balance Sheets as of September 30, 2012.

Also, on April 5, 2012, we acquired the remaining 49% interest in the Oaks and Westroads, previously owned through a joint venture, for $191.1 million which included the assumption the remaining 49% of debt of $92.8 million and $98.3 million of cash.  The properties were previously recorded under the equity method of accounting and are now consolidated.  The acquisition resulted in a remeasurement of the net assets acquired to fair value.  We recorded a gain from the change in control, since the fair value of the net assets acquired was greater than our investment in the joint venture and the cash paid.  This gain is reported in our Consolidated Statements of Operations and Comprehensive Income (Loss).  The table below summarizes the gain calculation:

Total fair value of net assets acquired	$	200,271
Previous investment in the Oaks and Westroads	(83,415		)
Cash paid to acquire our joint venture partner’s interest	(98,309		)
Gain from change in control of investment properties	$	18,547

The following table summarizes the allocation of the purchase price to the net assets acquired at the date of acquisition.  These allocations were based on the relative fair values of the assets acquired and liabilities assumed.

Investment in real estate	$	402,197
Above-market lease intangibles	15,746
Below-market lease intangibles	(29,393		)
Fair value of mortgages, notes and loans payable	(197,927		)
Net working capital	9,648
Net assets acquired	$	200,271

13

GENERAL GROWTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

Intangible Assets and Liabilities

The following table summarizes our intangible assets and liabilities:

	Gross Asset (Liability)			Accumulated (Amortization)/ Accretion			Net Carrying Amount
As of September 30, 2012
Tenant leases:
In-place value	$	1,005,505		$	(394,853	)	$	610,652
Above-market	1,244,135			(378,625		)	865,510
Below-market	(740,840		)	228,555			(512,285		)
Building leases:
Above-market	(15,268		)	2,969			(12,299		)
Ground leases:
Above-market	(9,756		)	711			(9,045		)
Below-market	196,824			(8,678		)	188,146
Real estate tax stabilization agreement	111,506			(11,945		)	99,561
As of December 31, 2011
Tenant leases:
In-place value	$	1,252,484		$	(391,605	)	$	860,879
Above-market	1,478,798			(315,044		)	1,163,754
Below-market	(819,056		)	184,254			(634,802		)
Building leases:
Above-market	(15,268		)	1,697			(13,571		)
Ground leases:
Above-market	(9,839		)	439			(9,400		)
Below-market	204,432			(6,202		)	198,230
Real estate tax stabilization agreement	111,506			(7,211		)	104,295

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 tenant leases and below-market ground leases are included in prepaid expenses and other assets (Note 12); the below-market tenant leases, above-market ground leases and above-market building lease are included in accounts payable and accrued expenses (Note 13) in our Consolidated Balance Sheets.

Amortization/accretion of these intangibles had the following effects on our loss from continuing operations:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Amortization/accretion effect on continuing operations	$	(88,769	)	$	(125,541	)	$	(276,521	)	$	(362,723	)

Future amortization/accretion of these intangibles is estimated to decrease results from continuing operations by approximately $74.4 million for the remainder of 2012, $247.5 million in 2013, $199.9 million in 2014, $162.1 million in 2015 and $128.1 million in 2016.

NOTE 4        DISPOSITIONS, DISCONTINUED OPERATIONS AND GAINS (LOSSES) ON DISPOSITIONS OF INTERESTS IN OPERATING PROPERTIES

During the three months ended September 30, 2012, we sold our interests in one office portfolio, two regional malls, four strip centers and one office building for an aggregate sales price of $216.6 million.  We utilized the proceeds from these sales to paydown $89.8 million of debt associated with these properties resulting in net proceeds of $126.8 million and a gain of $13.2 million.  The office property was sold to HHC.  HHC assumed the remaining $19.2 million of the debt on the property as consideration for the sale.

14

GENERAL GROWTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

On March 2, 2012, we sold our interest in one regional mall for $25.0 million.  We received $8.0 million in cash and entered into a secured note receivable with the buyer for $17.0 million.

On February 21, 2012, we sold Grand Traverse Mall to RPI.  Prior to the sale, the lender forgave $18.9 million of the secured indebtedness, which was partially offset by the write-off of debt market rate adjustments of $9.0 million.  The net gain on extinguishment of debt, of $9.9 million, is included in discontinued operations in our Consolidated Statements of Operations and Comprehensive Income (Loss).  RPI assumed the remaining $62.0 million of debt on the property as consideration for the sale.

On January 12, 2012, we completed the spin-off of RPI, a 30-mall portfolio totaling approximately 21 million square feet.  The RPI Spin-off was accomplished through a special dividend of the common stock of RPI to holders of GGP common stock as of December 30, 2011.  Subsequent to the spin-off, we retained a 1% interest in RPI.

All of our 2012 and 2011 dispositions are included in discontinued operations in our Consolidated Statements of Operations and Comprehensive Income (Loss) and are summarized in the table below.  In the first quarter of 2012, we revised our intent with respect to four properties previously classified as held for sale.  As we no longer met the criteria for held for sale treatment, we reclassified these four properties as held for use in our Consolidated Balance Sheet.  Three of these properties are presented within continuing operations and one property, which was subsequently sold, is presented within discontinued operations for all periods presented. These properties were measured at the lower of the carrying amount before the asset was classified as held for sale, adjusted for any depreciation and amortization expense that would have been recognized had the asset been continuously classified as held and used, and fair value at the date of decision not to sell.

The following table summarizes the operations of the properties included in discontinued operations.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
	(In thousands)
Retail and other revenue	$	4,858		$	82,258		$	38,620		$	260,156
Retail and other operating expenses	3,933			69,023			23,440			206,264
Provisions for impairment	—			—			10,393			51
Total expenses	3,933			69,023			33,833			206,315
Operating income	925			13,235			4,787			53,841
Interest expense, net	(561		)	(19,628		)	(6,819		)	(68,705		)
Net income (loss) from operations	364			(6,393		)	(2,032		)	(14,864		)
Provision for income taxes	—			(158		)	(23		)	(500		)
Allocation to noncontrolling interest	—			(93		)	—			(146		)
Gain on dispositions	13,212			2,368			13,037			1,822
Net income (loss) from discontinued operations	$	13,576		$	(4,276	)	$	10,982		$	(13,688	)

* Includes a net gain on debt extinguishment of $9.9 million during the nine months ended September 30, 2012.

NOTE 5        UNCONSOLIDATED REAL ESTATE AFFILIATES

The Unconsolidated Real Estate Affiliates represents our investments in real estate joint ventures that are not consolidated. Generally, we share in the profits and losses, cash flows and other matters relating to our investments in Unconsolidated Real Estate Affiliates in accordance with our respective ownership percentages.  We manage most of the properties owned by these joint ventures.  As we have joint control of these ventures with our venture partners, we account for these joint ventures under the equity method.

In certain circumstances, we have debt obligations in excess of our pro rata share of the debt of our Unconsolidated Real Estate Affiliates (“Retained Debt”). This Retained Debt represents distributed debt proceeds of the Unconsolidated Real Estate Affiliates in excess of our pro rata share of the non-recourse mortgage indebtedness of such Unconsolidated Real Estate Affiliates. The proceeds of the Retained Debt which are distributed to us are included as a reduction in our investment in Unconsolidated Real Estate Affiliates.  Such Retained Debt existed at one property and totaled $92.1 million as of September 30, 2012 and existed at two properties and totaled $130.6

15

GENERAL GROWTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

million as of December 31, 2011.  We are obligated to contribute funds to our Unconsolidated Real Estate Affiliates in amounts sufficient to pay debt service on such Retained Debt.  If we do not contribute such funds, our distributions from such Unconsolidated Real Estate Affiliates, or our interest in, could be reduced to the extent of such deficiencies.  As of September 30, 2012, we do not anticipate an inability to perform on our obligations with respect to such Retained Debt.

Indebtedness secured by our Unconsolidated Properties was $6.26 billion as of September 30, 2012 and $5.80 billion as of December 31, 2011 due to additional excess proceeds as a result of refinancings.  Our proportionate share of such debt was $2.94 billion as of September 30, 2012 and $2.78 billion as of December 31, 2011, including Retained Debt.  There can be no assurance that the Unconsolidated Properties will be able to refinance or restructure such debt on acceptable terms or otherwise, or that joint venture operations or contributions by us and/or our partners will be sufficient to repay such loans.

Condensed Combined Financial Information of Unconsolidated Real Estate Affiliates

Following is summarized financial information for our Unconsolidated Real Estate Affiliates.

	September 30,			December 31,
	2012			2011
Condensed Combined Balance Sheets - Unconsolidated Real Estate Affiliates
Assets:
Land	$	956,214		$	953,603
Buildings and equipment	7,608,675			7,906,346
Less accumulated depreciation	(2,027,208		)	(1,950,860		)
Construction in progress	152,659			99,352
Net property and equipment	6,690,340			7,008,441
Investments in unconsolidated joint ventures	1,104,360			758,372
Net investment in real estate	7,794,700			7,766,813
Cash and cash equivalents	267,468			387,549
Accounts and notes receivable, net	157,618			162,822
Deferred expenses, net	297,516			250,865
Prepaid expenses and other assets	163,110			143,021
Total assets	$	8,680,412		$	8,711,070
Liabilities and Owners’ Equity:
Mortgages, notes and loans payable	$	6,259,558		$	5,790,509
Accounts payable, accrued expenses and other liabilities	433,871			446,462
Owners’ equity	1,986,983			2,474,099
Total liabilities and owners’ equity	$	8,680,412		$	8,711,070
Investment In and Loans To/From Unconsolidated Real Estate Affiliates, Net:
Owners’ equity	$	1,986,983		$	2,474,099
Less joint venture partners’ equity	(1,142,358		)	(1,417,682		)
Capital or basis differences	1,872,454			1,996,556
Investment in and loans to/from
Unconsolidated Real Estate Affiliates, net	$	2,717,079		$	3,052,973

16

GENERAL GROWTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Condensed Combined Statements of Income - Unconsolidated Real Estate Affiliates
Revenues:
Minimum rents	$	188,299		$	174,587		$	573,276		$	528,495
Tenant recoveries	74,767			72,571			225,059			219,604
Overage rents	5,788			4,766			16,743			12,024
Management and other fees	4,945			3,657			17,087			12,431
Other	7,659			26,381			40,046			40,831
Total revenues	281,458			281,962			872,211			813,385
Expenses:
Real estate taxes	23,927			21,885			71,858			67,728
Property maintenance costs	8,838			9,219			27,652			29,296
Marketing	4,080			4,214			10,894			10,628
Other property operating costs	42,232			43,524			120,561			122,234
Provision for doubtful accounts	943			2,573			1,711			6,422
Property management and other costs	11,388			11,411			36,113			33,956
General and administrative	5,447			5,007			25,544			19,271
Depreciation and amortization	65,189			64,973			203,976			196,227
Total expenses	162,044			162,806			498,309			485,762
Operating income	119,414			119,156			373,902			327,623
Interest income	2,400			5,005			8,114			15,339
Interest expense	(85,121		)	(90,858		)	(253,938		)	(265,770		)
Provision for income taxes	(221		)	(213		)	(672		)	(585		)
Equity in income of unconsolidated joint ventures	15,309			20,820			33,222			39,055
Income from continuing operations	51,781			53,910			160,628			115,662
Discontinued operations	398			(784		)	(543		)	111,399
Allocation to noncontrolling interests	(535		)	(459		)	(1,267		)	(3,435		)
Net income attributable to the ventures	$	51,644		$	52,667		$	158,818		$	223,626
Equity In Income (Loss) of Unconsolidated Real Estate Affiliates:
Net income attributable to the ventures	$	51,644		$	52,667		$	158,818		$	223,626
Joint venture partners’ share of income	(30,050		)	(32,352		)	(95,005		)	(123,495		)
Amortization of capital or basis differences	460			(10,482		)	(23,964		)	(102,665		)
Equity in income (loss) of Unconsolidated Real Estate Affiliates	$	22,054		$	9,833		$	39,849		$	(2,534	)

NOTE 6        MORTGAGES, NOTES AND LOANS PAYABLE

Mortgages, notes and loans payable are summarized as follows:

	September 30,		December 31,
	2012		2011
Fixed-rate debt:
Collateralized mortgages, notes and loans payable	$	12,909,868	$	13,091,080
Corporate and other unsecured term loans	1,336,589		1,704,290
Total fixed-rate debt	14,246,457		14,795,370
Variable-rate debt:
Collateralized mortgages, notes and loans payable	1,827,558		2,347,644
Total Mortgages, notes and loans payable	$	16,074,015	$	17,143,014
Variable-rate debt:
Junior Subordinated Notes	$	206,200	$	206,200

The weighted-average interest rate excluding the effects of deferred finance costs on our collateralized mortgages, notes and loans payable was 4.81% at September 30, 2012 and 5.13% at December 31, 2011.  The weighted average interest rate on the remaining corporate unsecured fixed and variable rate debt was 5.98% at September 30, 2012 and 6.18% at December 31, 2011.

We are not aware of any instances of non-compliance with our financial covenants related to our mortgages, notes and loans payable as of September 30, 2012.  However, we have transferred three properties to the special servicer.  One of these properties was sold in a lender directed sale subsequent to September 30, 2012 (Note 16).

Collateralized Mortgages, Notes and Loans Payable

As of September 30, 2012, $21.58 billion of land, buildings and equipment (before accumulated depreciation) and construction in progress have been pledged as collateral for our mortgages, notes and loans payable. Certain of these secured loans, representing $2.13 billion of debt, are cross-collateralized with other properties.  Although a majority

17

GENERAL GROWTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

of the $14.74 billion of fixed and variable rate collateralized mortgages, notes and loans payable are non-recourse, $1.56 billion of such mortgages, notes and loans payable are recourse to the Company as guarantees on secured financings.  In addition, certain mortgage loans contain other credit enhancement provisions (primarily master leases for all or a portion of the property) which have been provided by GGP.  Certain mortgages, notes and loans payable may be prepaid but are generally subject to a prepayment penalty equal to a yield-maintenance premium, defeasance or a percentage of the loan balance.

On August 3, 2012, we closed on $763.5 million secured financings of five consolidated properties with a single lender.  The loans mature between January 2019 and September 2024 and bear interest at a weighted average rate of 5.80% per annum and replace loans at these properties in the same amount with an average interest rate of 7.5%.  Proceds from the financings were used to unencumber two properties.

On June 6, 2012, we closed on a new loan for The Grand Canal Shoppes and The Shoppes at The Palazzo in the amount of $625.0 million, which bears interest at 4.24% and matures in 2019.  The new loan replaces the existing loans at The Grand Canal Shoppes which was $368.1 million, bore interest at 4.78% and was scheduled to mature in 2014 and The Shoppes at The Palazzo, which was $239.0 million, bore interest at LIBOR plus 300 basis points and was scheduled to mature in 2017.  The new loan eliminates $238.7 million of recourse to the Company and resulted in $18.7 million in excess proceeds.

On April 2, 2012, we closed the $1.40 billion secured financing of Ala Moana Center.  The loan matures in April 2022 and bears interest at 4.23% per annum. The new loan replaces the previous loan at Ala Moana, which was $1.29 billion, bore interest at 5.59% and was scheduled to mature in 2018. The transaction resulted in $110.0 million in excess proceeds.

Corporate and Other Unsecured Loans

We have certain unsecured debt obligations, the terms of which are described below.

We have publicly-traded unsecured bonds of $1.30 billion outstanding as of September 30, 2012 and $1.65 billion outstanding as of December 31, 2011.  Such bonds have maturity dates from May 2013 through November 2015 and interest rates ranging from 5.38% to 6.75%.  The bonds have covenants, including ratios of secured debt to gross assets and total debt to total gross assets. We are not aware of any instances of non-compliance with such covenants as of September 30, 2012. We repaid the $349.5 million bond on September 17, 2012, when it matured, with available cash on hand.

In April 2012, we amended our revolving credit facility (the “Facility”) providing for revolving loans of up to $1.00 billion.  The Facility is scheduled to mature in April 2016 and is guaranteed by certain of our subsidiaries and secured by (i) first lien mortgages on certain properties, (ii) first-lien pledges of equity interests in certain of our subsidiaries and (iii) various additional collateral.  No amounts have been drawn on the Facility.  Borrowings under the Facility bear interest at a rate equal to LIBOR plus 2.25%.  The Facility contains certain restrictive covenants which limit material changes in the nature of our business conducted, including but not limited to, mergers, dissolutions or liquidations, dispositions of assets, liens, incurrence of additional indebtedness, dividends, transactions with affiliates, prepayment of subordinated debt, negative pledges and changes in fiscal periods. In addition, we are required to maintain a maximum net debt to value ratio, a maximum leverage ratio and a minimum net cash interest coverage ratio; we are not aware of any instances of non-compliance with such covenants as of September 30, 2012.

We also have a note payable to HHC in the amount of $20.8 million, which bears interest at 4.41% per annum and matures in 2015.

The corporate and other unsecured loans exclude a net market rate premium of $15.2 million that increases the total amount that appears outstanding on the consolidated balance sheets.  The market rate premium amortizes as a reduction to interest expense over the life of the respective loan.

18

GENERAL GROWTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

Junior Subordinated Notes

GGP Capital Trust I, a Delaware statutory trust (the “Trust”) and a wholly-owned subsidiary of GGPLP, completed a private placement of $200.0 million of trust preferred securities (“TRUPS”) in 2006.  The Trust also issued $6.2 million of Common Securities to GGPLP.  The Trust used the proceeds from the sale of the TRUPS and Common Securities to purchase $206.2 million of floating rate Junior Subordinated Notes of GGPLP due 2041.  Distributions on the TRUPS are equal to LIBOR plus 1.45%.  Distributions are cumulative and accrue from the date of original issuance.  The TRUPS mature on April 30, 2041, but may be redeemed beginning on April 30, 2011 if the Trust exercises its right to redeem a like amount of Junior Subordinated Notes.  The Junior Subordinated Notes bear interest at LIBOR plus 1.45%. Though the Trust is a wholly-owned subsidiary of GGPLP, we are not the primary beneficiary of the Trust and, accordingly, it is not consolidated for accounting purposes.  We have recorded the Junior Subordinated Notes as mortgages, notes and loans payable and our common equity interest in the Trust as prepaid expenses and other assets in our Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011.

Letters of Credit and Surety Bonds

We had outstanding letters of credit and surety bonds of $19.6 million as of September 30, 2012 and $19.1 million as of December 31, 2011. These letters of credit and bonds were issued primarily in connection with insurance requirements, special real estate assessments and construction obligations.

NOTE 7        INCOME TAXES

We have elected to be taxed as a REIT under sections 850-860 of the Internal Revenue Code.  We intend to maintain REIT status. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including requirements to distribute at least 90% of our ordinary taxable income and to either distribute capital gains to stockholders, or pay corporate income tax on the undistributed capital gains. In addition, the Company is required to meet certain asset and income tests.

As a REIT, we will generally not be subject to corporate level Federal income tax on taxable income we distribute currently to our stockholders. If we fail to qualify as a REIT in any taxable year, we will be subject to Federal income taxes at regular corporate rates (including any applicable alternative minimum tax) and may not be able to qualify as a REIT for four subsequent taxable years.  Even if we qualify for taxation as a REIT, we may be subject to certain state and local taxes on our income or property, and to Federal income and excise taxes on our undistributed taxable income.  Generally, we are currently open to audit by the Internal Revenue Service for the years ending December 31, 2009 through 2011 and are open to audit by state taxing authorities for the years ending December 31, 2008 through 2011.

Based on our assessment of the expected outcome of examinations that are in process or may commence, or as a result of the expiration of the statute of limitations for specific jurisdictions, we do not expect that the related unrecognized tax benefits, excluding accrued interest, for tax positions taken regarding previously filed tax returns will materially change from those recorded at December 31, 2011 during the next twelve months.

NOTE 8        WARRANT LIABILITY

Pursuant to the terms of the Investment Agreements, the Plan Sponsors and Blackstone were issued 120,000,000 warrants (the “Warrants”) to purchase common stock of GGP.  Each GGP Warrant has a term of seven years and expires on November 9, 2017 and no warrants have been exercised to date.  The Brookfield Investor Warrants and the Blackstone (A and B) Investor Warrants are immediately exercisable, while the Fairholme Warrants and the Pershing Square Warrants will be exercisable (for the initial 6.5 years from the issuance) only upon 90 days prior notice.   However, upon such notice Fairholme and Pershing Square are not obligated to exercise at any point from the end of the 90 day notification period through maturity. Below is a summary of the Warrants initially received by the Plan Sponsors and Blackstone.

19

GENERAL GROWTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

		Initial
Warrant Holder	Number of Warrants	Exercise Price
Brookfield Investor	57,500,000	$	10.75
Blackstone - B	2,500,000	10.75
Fairholme	41,070,000	10.50
Pershing Square	16,430,000	10.50
Blackstone - A	2,500,000	10.50
	120,000,000

The Warrants were fully vested upon issuance and the exercise prices are subject to adjustment for future dividends, stock dividends, distribution of assets, stock splits or reverse splits of our common stock or certain other events. In accordance with the agreement, these calculations adjust both the exercise price and the number of shares issuable for the 120,000,000 Warrants. As a result of these investment provisions, as of the record date of our common stock dividends, the number of shares issuable upon exercise of the outstanding Warrants was increased as follows:

	Exercise Price
Record Date	Issuable Shares	Brookfield Investor and Blackstone - B		Fairholme, Pershing Square and Blackstone - A
April 15, 2011	123,960,000	$	10.41	$	10.16
July 15, 2011	124,704,000	10.34		10.10
December 30, 2011	131,748,000	9.79		9.56
April 16, 2012	132,372,000	9.75		9.52
July 16, 2012	133,116,000	9.69		9.47

In addition to the adjustment for the common stock dividends, as a result of the RPI Spin-off, the exercise price of the Warrants was adjusted by $0.3943 for the Brookfield Investor and Blackstone-B Warrants and by $0.3852 for the Fairholme, Pershing Square and Blackstone-A Warrants, on the record date of December 30, 2011. As a result, the total number of issuable shares was 131,748,000.  During the three months ended September 30, 2012, as required per the terms of the Warrant Agreement, Fairholme gave notice of their intent to exercise their Warrants.  As noted above, the Warrants require a 90 day notification period prior to exercise. Fairholme is not required to exercise its Warrants as a result of the notice at any time after the 90 day period and prior to the maturity of the Warrants.

The estimated fair value of the Warrants was $1.40 billion as of September 30, 2012 and $986.0 million as of December 31, 2011 and is recorded as a liability as the holders of the Warrants may require GGP to settle such warrants in cash in the circumstance of a subsequent change of control.  Changes in the fair value of the Warrants are recognized in earnings.  The fair value of the Warrants was estimated using the Black Scholes option pricing model using our stock price, the Warrant term, and Level 3 inputs (Note 2).  An increase in GGP’s common stock price or in the expected volatility of the Warrants would increase the fair value; whereas, a decrease in GGP’s common stock price or an increase in the lack of marketability would decrease the fair value.  The discount for lack of marketability represents the costs associated with selling the warrants to another party.  The terms of the Warrants were not adjusted when determining the fair value as a result of the notice from Fairholme discussed above.  The following table summarizes the estimated fair value of the Warrants and significant observable and unobservable inputs used in the valuation as of September 30, 2012 and December 31, 2011:

20

GENERAL GROWTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

	September 30, 2012			December 31, 2011
Warrant liability	$	1,399,043		$	985,962
Observable Inputs
GGP stock price per share	$	19.48		$	15.02
Warrant term	5.11			5.86
Unobservable Inputs
Expected volatility	30		%	37		%
Range of values considered	(15% - 70		)%	(20% - 65		)%
Discount for lack of marketability	3		%	3		%
Range of values considered	(3% - 7		)%	(3% - 7		)%

The following table summarizes the change in fair value of the Warrant liability which is measured on a recurring basis using Level 3 inputs:

	2012		2011
Balance as of January 1,	$	985,962	$	1,041,004
Warrant liability adjustment	413,081		(319,460		)
Balance as of September 30,	$	1,399,043	$	721,544

NOTE 9        EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS

Allocation to Noncontrolling Interests

Noncontrolling interests consists of the redeemable interests related to our common and preferred Operating Partnership units and the noncontrolling interest in our consolidated joint ventures.  The following table reflects the activity included in the allocation to noncontrolling interests.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Distributions to preferred Operating Partnership units	$	(2,335	)	$	(2,336	)	$	(10,104	)	$	(6,932	)
Net loss allocation to noncontrolling interests in operating partnership from continuing operations (common units)	1,603			(1,810		)	3,753			(386		)
Net income (loss) allocated to noncontrolling interest in consolidated real estate affiliates	(547		)	(365		)	115			600
Allocation to noncontrolling interests	$	(1,279	)	$	(4,511	)	$	(6,236	)	$	(6,718	)
Other comprehensive loss (income) allocation to common units	(5		)	612			233			302
Comprehensive loss allocated to noncontrolling interests	$	(1,284	)	$	(3,899	)	$	(6,003	)	$	(6,416	)

Redeemable Noncontrolling Interests

The minority interests related to our common and preferred Operating Partnership units are presented as redeemable noncontrolling interests in our Consolidated Balance Sheets, presented at the greater of the carrying amount adjusted for the noncontrolling interest’s share of the allocation of income or loss (and its share of other comprehensive income or loss) and dividends or their fair value as of each measurement date.  The common redeemable noncontrolling interests have been presented at fair value for all periods presented.  One tranche of preferred redeemable noncontrolling interests has been presented at fair value, while the other tranches of preferred redeemable noncontrolling interests have been presented at carrying value plus allocated loss and other comprehensive income (loss)  as of September 30, 2012.  All preferred redeemable noncontrolling interest have been presented at carrying value plus allocated loss and other comprehensive income (loss) as of December 31, 2011.  The excess of the fair value over the carrying amount from period to period is recorded within additional

21

GENERAL GROWTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

paid-in capital in our Consolidated Balance Sheets.  Allocation to noncontrolling interests is presented as an adjustment to net income to arrive at net loss attributable to common stockholders.

Generally, the holders of the Common Units share in any distributions by the Operating Partnership with our common stockholders.  However, the Operating Partnership agreement permits distributions solely to GGP if such distributions were required to allow GGP to comply with the REIT distribution requirements or to avoid the imposition of excise tax.  Under certain circumstances, the conversion rate for each Common Unit is required to be adjusted to give effect to stock distributions.  As a result, the common stock dividends paid in 2011 modified the conversion rate to 1.0397624.  The aggregate amount of cash that would have been paid to the holders of the outstanding Common Units as of September 30, 2012 if such holders had requested redemption of the Common Units as of September 30, 2012, and all such Common Units were redeemed or purchased pursuant to the rights associated with such Common Units for cash, would have been $132.0 million.

The Operating Partnership issued Convertible Preferred Units, which are convertible, with certain restrictions, at any time by the holder into Common Units of the Operating Partnership at the rates below (subject to adjustment).  The Common Units are convertible into common stock at a one to one ratio at the current stock price.  The convertible preferred units are carried at the greater of contractual redemption value or fair value (based on current stock price).

The holders of both the preferred units and the Common Units received shares of the common stock of RPI as a result of the spin-off that occurred on January 12, 2012.

	Number of Common Units for each Preferred Unit	Number of Contractual Convertible Preferred Units Outstanding as of September 30, 2012	Converted Basis to Common Units Outstanding as of September 30, 2012	Conversion Price		Redemption Value
Series B (1)	3.0000	1,279,715	3,991,799	$	16.66670	$	77,760,248
Series D	1.5082	532,750	803,494	33.15188		26,637,337
Series E	1.2984	502,658	652,651	38.51000		25,133,590
Series C	1.0000	20,000	20,000	250.00000		5,000,000
						$	134,531,175

(1)  The conversion price of Series B preferred units is lower than the GGP September 28, 2012 closing common stock price of $19.48.  Therefore, a common stock price of $19.48 is used to calculate the Series B redemption value.

The following table reflects the activity of the redeemable noncontrolling interests for the nine months ended September 30, 2012 and 2011.

22

GENERAL GROWTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

Balance at January 1, 2011	$	232,364
Net income	386
Distributions	(2,056		)
Cash redemption of operating partnership units	(4,615		)
Other comprehensive loss	(302		)
Adjustment for noncontrolling interests in Operating Partnership	(12,984		)
Balance at September 30, 2011	$	212,793
Balance at January 1, 2012	$	223,795
Net loss	(3,753		)
Distributions	(2,116		)
Cash redemption of operating partnership units	(1,134		)
Dividend for RPI Spin-off	3,137
Other comprehensive loss	(233		)
Adjustment for noncontrolling interests in Operating Partnership	46,855
Balance at September 30, 2012	$	266,551

Common Stock Dividend and Purchase of Common Stock

Our Board of Directors declared common stock dividends during 2012 as follows:

Declaration Date	Record Date	Date Payable or Paid	Dividend Per Share
August 1, 2012	October 15, 2012	October 29, 2012	0.11
May 1, 2012	July 16, 2012	July 30, 2012	0.10
February 27, 2012	April 16, 2012	April 30, 2012	0.10

On December 20, 2011, the Board of Directors approved the distribution of RPI in the form of a special dividend for which GGP shareholders were entitled to receive approximately 0.0375 shares of RPI common stock for each share of GGP common stock held as of December 30, 2011.  RPI’s net equity was recorded as of December 31, 2011 as a dividend payable as substantive conditions for the spin-off were met as of December 31, 2011 and it was probable that the spin-off would occur.  On January 12, 2012, we distributed our shares in RPI to the GGP shareholders of record as of the close of business on December 30, 2011.  As of December 31, 2011, we had recorded a distribution payable of $526.3 million and a related decrease in retained earnings (accumulated deficit), of which $426.7 million relates to the special dividend, on our Consolidated Balance Sheet.  This special dividend satisfied part of our 2011 and 2012 REIT distribution requirements.  We adjusted the distribution in retained earnings (accumulated deficit) by $26.0 million to reflect the net change in RPI’s net assets as of the date of the spin-off as compared to the balance recorded at December 31, 2011.

We implemented our Dividend Reinvestment Plan (“DRIP”) in March 2011.  The DRIP provides eligible holders of GGP’s common stock with a convenient method of increasing their investment in the Company by reinvesting all or a portion of cash dividends in additional shares of common stock.  Eligible stockholders who enroll in the DRIP on or before the fourth business day preceding the record date for a dividend payment will be able to have that dividend reinvested.  As a result of the DRIP elections, 2,866,019 shares were issued during the nine months ended September 30, 2012 and 4,846,784 shares were issued during the nine months ended September 30, 2011.

NOTE 10      EARNINGS PER SHARE

Basic earnings per share (“EPS”) is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding.  Diluted EPS is computed after adjusting the numerator and denominator of the basic EPS computation for the effects of all potentially dilutive common shares.  The dilutive effect of the Warrants are computed using the “if-converted” method and the dilutive effect of options and

23

GENERAL GROWTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

their equivalents (including fixed awards and nonvested stock issued under stock-based compensation plans), is computed using the “treasury” method.

All options were anti-dilutive for the three months and nine months ended September 30, 2012 because of net losses.  All options were anti-dilutive for the three months and nine months ended September 30, 2011, as the impact of the warrant adjustment reduced income from continuing operations to a loss.  As such, the effect of options has been excluded from the calculation of diluted net loss per share for all periods presented.  Potentially dilutive shares related to the warrants of 65,689,708 for the three months ended September 30, 2012 and 58,781,182 for the nine months ended September 30, 2012 have been excluded from the denominator in the computation of diluted EPS as they were anti-dilutive.  The warrants were dilutive for the three and nine months ended September 30, 2011 and the effect of the warrants is included in the denominator in the computation of diluted EPS. Outstanding Common Units have also been excluded from the diluted earnings per share calculation because including such Common Units would also require that the share of GGPLP income attributable to such Common Units be added back to net income therefore resulting in no effect on EPS.

Information related to our EPS calculations is summarized as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
	Basic and Diluted			Basic and Diluted			Basic and Diluted			Basic and Diluted
Numerators - Basic and Diluted:
Income (loss) from continuing operations	$	(220,184	)	$	260,837		$	(518,183	)	$	75,072
Allocation to noncontrolling interests	(1,203		)	(4,431		)	(6,106		)	(6,665		)
Loss (income) from continuing operations - net of noncontrolling interests	(221,387		)	256,406			(524,289		)	68,407
Discontinued operations	13,576			(4,276		)	10,982			(13,688		)
Allocation to noncontrolling interests	(76		)	(80		)	(130		)	(53		)
Discontinued operations - net of noncontrolling interests	13,500			(4,356		)	10,852			(13,741		)
Net loss	(206,608		)	256,561			(507,201		)	61,384
Allocation to noncontrolling interests	(1,279		)	(4,511		)	(6,236		)	(6,718		)
Net loss (income) attributable to common stockholders	$	(207,887	)	$	252,050		$	(513,437	)	$	54,666
Numerators - Diluted:
Loss from continuing operations - net of noncontrolling interests	$	(221,387	)	$	256,406		$	(524,289	)	$	68,407
Exclusion of warrant adjustment	—			(337,781		)	—			(319,460		)
Diluted loss from continuing operations	$	(221,387	)	$	(81,375	)	$	(524,289	)	$	(251,053	)
Net loss attributable to common stockholders	$	(207,887	)	$	252,050		$	(513,437	)	$	54,666
Exclusion of warrant adjustment	—			(337,781		)	—			(319,460		)
Diluted net loss attributable to common stockholders	$	(207,887	)	$	(85,731	)	$	(513,437	)	$	(264,794	)
Denominators:
Weighted average number of common shares outstanding - basic and diluted	938,316			936,260			937,795			946,743
Effect of dilutive securities	—			34,431			—			39,032
Weighted average number of common shares outstanding - diluted	938,316			970,691			937,795			985,775

NOTE 11      STOCK-BASED COMPENSATION PLANS

The General Growth Properties, Inc. 2010 Equity Plan (the “Equity Plan”) provides for grants of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, and other stock-based awards and performance-based compensation.  Stock-based compensation expense associated with the Equity Plan and outstanding options granted by the Predecessor and converted into options of the Successor are summarized in the following table:

24

GENERAL GROWTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Stock options - Property management and other costs	$	732	$	518	$	2,402	$	1,710
Stock options - General and administrative	1,593		1,594		4,704		3,861
Restricted stock - Property management and other costs	372		707		1,269		2,662
Restricted stock - General and administrative	1,982		2,264		5,948		6,536
Total	$	4,679	$	5,083	$	14,323	$	14,769

The following table summarizes stock option activity for the nine months ended September 30, 2012 and 2011:

	2012				2011
			Weighted				Weighted
			Average				Average
			Exercise				Exercise
	Shares		Price		Shares		Price
Stock options Outstanding at January 1,	11,503,869		$	15.65	5,427,011		$	20.21
Granted	—		—		8,262,716		15.31
Exercised	(386,029	)	13.56		(51,988	)	11.05
Forfeited	(351,856	)	14.65		(1,054,479	)	14.78
Expired	(499,088	)	46.39		(927,078	)	39.31
Stock options Outstanding at September 30,	10,266,896		$	13.64	11,656,182		$	15.68

There was no significant restricted stock activity for the three and nine months ended September 30, 2012 and 2011.

NOTE 12      PREPAID EXPENSES AND OTHER ASSETS

The following table summarizes the significant components of prepaid expenses and other assets.

	September 30,		December 31,
	2012		2011
Above-market tenant leases, net (Note 3)	$	865,510	$	1,163,754
Below-market ground leases, net (Note 3)	188,146		198,230
Security and escrow deposits	152,166		247,718
Real estate tax stabilization agreement, net (Note 3)	99,561		104,295
Prepaid expenses	68,236		51,928
Other non-tenant receivables	7,697		21,198
Deferred tax, net of valuation allowances	529		4,578
Other	16,649		13,834
Total prepaid expenses and other assets	$	1,398,494	$	1,805,535

25

GENERAL GROWTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

NOTE 13ACCOUNTS PAYABLE AND ACCRUED EXPENSES

The following table summarizes the significant components of accounts payable and accrued expenses.

	September 30,		December 31,
	2012		2011
Below-market tenant leases, net (Note 3)	$	512,285	$	634,802
Accrued interest	208,008		196,536
Accounts payable and accrued expenses	139,523		164,139
Accrued real estate taxes	95,466		77,722
Deferred gains/income	78,612		65,174
Accrued payroll and other employee liabilities	70,045		77,231
Construction payable	59,094		69,291
Tenant and other deposits	22,937		19,336
Insurance reserve liability	15,866		17,796
Capital lease obligations	12,605		12,774
Above-market headquarter office leases, net (Note 3)	12,299		13,571
Conditional asset retirement obligation liability	12,345		16,596
Above-market ground leases, net (Note 3)	9,045		9,400
Uncertain tax position liability	5,873		6,847
Other	17,361		64,523
Total accounts payable and accrued expenses	$	1,271,364	$	1,445,738

NOTE 14LITIGATION

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 effect on our consolidated financial position, results of operations or liquidity.

Default Interest

Pursuant to the Plan, the Company cured and reinstated that certain note (the “Homart Note”) in the original principal amount of $254.0 million between GGP Limited Partnership and The Comptroller of the State of New York as Trustee of the Common Retirement Fund (“CRF”) by payment in cash of accrued interest at the contractual non-default rate.   CRF, however, contended that the Company’s bankruptcy caused the Company to default under the Homart Note and, therefore, post-petition interest accrued under the Homart Note at the contractual default rate was due for the period June 1, 2009 until November 9, 2010.  On June 16, 2011, the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) ruled in favor of CRF, and, on June 22, 2011, the Company elected to satisfy the Homart Note in full by paying CRF the outstanding default interest and principal amount on the Homart Note totaling $246.0 million.  As a result of the ruling, the Company incurred and paid $11.7 million of default interest expense during the year ended December 31, 2011. However, the Company has appealed the Bankruptcy Court’s order and has reserved its right to recover the payment of default interest.

Pursuant to the Plan, the Company agreed to pay to the holders of claims (the “2006 Lenders”) under a revolving and term loan facility (the “2006 Credit Facility”) the principal amount of their claims outstanding of approximately $2.58 billion plus post-petition interest at the contractual non-default rate. However, the 2006 Lenders asserted that they were entitled to receive interest at the contractual default rate.  In July 2011, the Bankruptcy Court ruled in favor of the 2006 Lenders, and in August 2011, the Company appealed the order. As a result of the ruling, the Company has accrued $94.9 million as of September 30, 2012 and $91.5 million as of December 31, 2011. We will continue to evaluate the appropriateness of our accrual during the appeal process.

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GENERAL GROWTH PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

Tax Indemnification Liability

Pursuant to the Investment Agreements, the Successor has indemnified HHC from and against 93.75% of any and all losses, claims, damages, liabilities and reasonable expenses to which HHC and its subsidiaries become subject, in each case solely to the extent directly attributable to MPC Taxes (as defined in the Investment Agreements) in an amount up to $303.8 million.  Under certain circumstances, we agreed to be responsible for interest or penalties attributable to such MPC Taxes in excess of the $303.8 million.  As a result of this indemnity, The Howard Hughes Company, LLC and Howard Hughes Properties, Inc. filed petitions in the United States Tax Court on May 6, 2011, contesting this liability.  Trial is expected in November 2012; however, a decision is not expected until late 2013.We have accrued $303.8 million as of September 30, 2012 and December 31, 2011 related to the tax indemnification liability. In addition, we have accrued $21.6 million of interest related to the tax indemnification liability in accounts payable and accrued expenses on our Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011.  The aggregate liability of $325.4 million represents management’s best estimate of our liability as of September 30, 2012, which will be periodically evaluated in the aggregate.  We do not expect to make any significant payments on the tax indemnification liability within the next 12 months.

NOTE 15COMMITMENTS AND CONTINGENCIES

We lease land or buildings at certain properties from third parties.  Rental payments are expensed as incurred and have, to the extent applicable, been straight-lined over the term of the lease.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Contractual rent expense, including participation rent	$	3,688	$	3,147	$	11,031	$	10,157
Contractual rent expense, including participation rent and excluding amortization of above- and below-market ground leases and straight-line rent	2,250		1,701		6,714		5,796

See Note 7 and Note 14 for our obligations related to uncertain tax positions and for disclosure of additional contingencies.

NOTE 16SUBSEQUENT EVENTS

On October 9, 2012, we acquired an additional interest in Aliansce Shopping Centers S.A from certain affiliates of Pershing Square Capital Management, L.P. for $195.2 million.  The additional 14.1% interest increased our total investment in our Brazilian Unconsolidated Real Estate Affiliate to approximately 45.56%.

On October 11, 2012, one property that was transferred to the special servicer was auctioned in a lender directed sale for a sales price of $15.2 million.  The lender accepted the auction amount in lieu of the outstanding debt on the property of $65.0 million.  In accordance with the terms of the auction, the buyer has 30 days to complete the sale.  The closing date is tentatively scheduled for November 12, 2012.

On October 19, 2012, we closed on an $835.0 million loan with a fixed rate of 4.033% that matures in 2024, resulting in proceeds of $222.5 million.  The new loan replaces a $612.5 million loan with an interest rate of LIBOR plus 3% that was scheduled to mature in May 2017.

On October 30, 2012, we sold our interest in one regional mall for $43.5 million, which resulted in a nominal gain.  In addition, we reduced our debt by $37.7 million, as we repaid the loan with proceeds from the sale.

According to Sandeep Mathrani’s employment agreement that was entered into in October 2010, he was granted 1,500,000 shares of restricted common stock which vest in three equal installments on each of the first three anniversaries of the grant date.  On October 31, 2012, with the approval of the Compensation Committee, Mr. Mathrani’s restricted common stock award was amended to defer the vesting of 500,000 shares of restricted stock until October 2013.  There was no change in compensation expense as a result of the award vesting modification.

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

All references to numbered Notes are to specific footnotes to our consolidated financial statements included in this Quarterly Report and whose 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.

Forward-looking information

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

Forward-looking statements include:

·descriptions of plans or objectives for future operations;

·projections of our revenues, net operating income, Company net operating income, earnings per share, Funds From Operations (“FFO”), Company FFO, capital expenditures, income tax and other contingent liabilities, dividends, leverage, capital structure or other financial items;

·forecasts of our future economic performance; or

·descriptions of assumptions underlying or relating to any of the foregoing,

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,” “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 might not update them to reflect changes that occur after the date they are made.

There are several factors, many beyond our control, which could cause results to differ materially from our expectations, some of which are described in Item 1A Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2011 (our “Annual Report”), and as recast in the Form 8-K filed on June 27, 2012.  These 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 — Introduction

Our primary business is to own and operate best-in-class malls that provide an outstanding environment and experience for our communities, retailers, employees, consumers and shareholders.  The substantial majority of our properties are located in the United States; however, we also own interests in regional malls and property management activities (through unconsolidated joint ventures) in Brazil.  As of September 30, 2012, we are the owner, either entirely or with joint venture partners, of 145 regional malls (129 domestic and 16 in Brazil) comprising approximately 136 million square feet of gross leasable area.  During the third quarter, our regional mall count was reduced by six properties due to the sale of two properties, and three properties which were transferred to the special servicer and one property that is being de-leased in preparation for planned redevelopment.

We provide management and other services to substantially all of our properties, including properties which we own through joint venture arrangements and which are unconsolidated for GAAP purposes.  Our management operating philosophies and strategies are the same whether the properties are consolidated or unconsolidated.

Our key operational objectives include the following:

·lease vacant space;

·increase the permanent occupancy of the regional mall portfolio, including converting temporary leases to permanent leases, which have longer contractual terms and significantly higher minimum rents and tenant recovery rates;

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·opportunistically acquire whole or partial interests in high-quality regional malls and anchor pads that improve the overall quality of our portfolio;

·execute on planned redevelopment projects within our portfolio;

·dispose of properties in our portfolio that do not fit within our long-term strategy, including certain of our office properties, strip centers and regional malls; and

·continue to refinance our maturing debt, and certain debt prepayable without penalty, with the goal of lowering our overall borrowing costs and managing future maturities.

We seek to increase long-term Company NOI (as defined below) growth through proactive management and leasing of our regional malls.  Our leasing strategy is to identify and provide the right stores and the appropriate merchandise for each of our regional malls. We believe that the most significant operating factor affecting incremental cash flow and NOI is increased rents earned from tenants at our properties.  These rental revenue increases are primarily achieved by:

·renewing expiring leases and re-leasing existing space at rates higher than expiring or existing rates;

·increasing occupancy at the properties so that more space is generating rent; and

·increased tenant sales in which we participate through overage rent.

Overview

In 2011, we embarked on a strategy to execute transactions to achieve our long-term goals of enhancing the quality of our portfolio and maximizing total returns for our shareholders.  We continued this strategy to improve the overall quality of our portfolio during 2012, as we successfully completed transactions and achieved operational goals that promote our long-term strategy as summarized below:

·on January 12, 2012, we distributed our shares in RPI to the GGP shareholders of record as of the close of business on December 30, 2011.  GGP shareholders were entitled to receive approximately 0.0375 shares of RPI common stock for each share of GGP common stock held as of December 30, 2011.  Subsequent to the spin-off, we retained an approximately 1% interest in RPI.  These properties are presented within discontinued operations in our Consolidated Statements of Operations and Comprehensive Income (Loss).  The transaction decreased our outstanding mortgage loans by $1.12 billion;

·sold our interests in non-core assets including an office portfolio, one office property, five strip centers, four regional malls and an anchor box totaling approximately 3.9 million square feet of gross leasable area of for $311.3 million, which reduced our property level debt by $151.8 million.  These sales generated net proceeds of $156.8 million that will be re-invested in opportunities with higher returns;

·acquired fee or leasehold interest in seven anchor pads totaling 945 thousand square feet of gross leasable area for $36.7 million, which allows us to recapture real estate in our portfolio and provides us with redevelopment opportunities;

·acquired 11 Sears anchor pads (including fee interests in five anchor pads and long-term leasehold interests in six anchor pads) for $270.0 million.  This portfolio represents a significant opportunity to recapture valuable real estate within our portfolio and allows us to execute expansion and redevelopment opportunities, including re-tenanting the anchor space and adding new in-line GLA;

·acquired the remaining 49% interest in The Oaks and Westroads, previously owned through a joint venture, for $191.1 million which included the assumption of our incremental share of $93.7 million in additional debt;

·increased our occupancy to 92.7% as of September 30, 2012 from 91.2% as of September 30, 2011;

·increased the weighted average rent of in-place rents to $68.62 per square foot as of September 30, 2012 from $67.24 per square foot as of September 30, 2011; and

·on October 9, 2012, we acquired an additional interest in Aliansce Shopping Centers S.A from certain affiliates of Pershing Square Capital Management, L.P. for $195.2 million.  The additional 14.1% interest increased our total investment in our Brazilian Unconsolidated Real Estate Affiliate to approximately 45.6%.

As a result of our efforts, our portfolio now has sales of $543 per square foot.  We will continue to evaluate other opportunities to improve our portfolio.

Our Company NOI (as defined below) increased 3.7% from $508.1 million for the three months ended September 30, 2011 to $526.9 million for the three months ended September 30, 2012, and increased 4.4% from $1.50 billion for the nine months ended September 30, 2011 to $1.57 billion for the nine months ended September 30, 2012. Mall NOI increased 4.0% from $495.5 million for the three months ended September 30, 2011 to $515.2 million for the three months ended September 30, 2012, and increased 4.8% from $1.46 billion for the nine months ended September 30, 2011 to $1.53 billion for the nine months ended September 30, 2012. 

Our Company FFO (as defined below) increased 11.9% from $206.5 million for the three months ended September 30, 2011 to $231.0 million for the three months ended September 30, 2012, and

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increased 14.0% from $594.2 million for the nine months ended September 30, 2011 to $677.6 million for the nine months ended September 30, 2012.  Total Company FFO increased 8.8% from $212.6 million for the three months ended September 30, 2011 to $231.3 million for the three months ended September 30, 2012, and increased 10.1% from $619.3 million for the nine months ended September 30, 2011 to $681.9 million for the nine months ended September 30, 2012.

Operating Metrics

U.S. Regional Mall Metrics

The following table summarizes selected operating metrics for our portfolio of regional malls.  Tenant sales increased 9.0% to $543 per square foot on a trailing twelve month basis.

	In-Place
	Rents per square foot (1)			Percentage Leased (2)		Tenant Sales (3)
September 30, 2012
Consolidated Properties	$	66.84		95.30	%	$	521
Unconsolidated Properties	$	73.37		96.30	%	$	594
Total Domestic Portfolio	$	68.62		95.50	%	$	541
September 30, 2011
Consolidated Properties	$	65.53		93.60	%	$	487
Unconsolidated Properties	$	71.75		95.80	%	$	534
Total Domestic Portfolio	$	67.24		94.20	%	$	500
% Change
Consolidated Properties	2.00		%	170 bps		6.98		%
Unconsolidated Properties	2.26		%	50 bps		11.24		%
Total Domestic Portfolio	2.05		%	130 bps		8.20		%

(1) Weighted average rent of mall stores as of September 30, 2012 and 2011.  Rent is presented on a cash basis and consists of minimum rent, common area costs and real estate taxes for tenants less than 10,000 square feet.

(2) Represents contractual obligations for space in regional malls or predominantly retail centers and excludes traditional anchor stores.

(3) Comparative rolling twelve month tenant sales for mall stores less than 10,000 square feet.

Lease Spread Metrics

The following table summarizes signed leases that are scheduled to commence in 2012 compared to expiring leases for the prior tenant in the same suite. Initial rental rates increased 10.4% compared to expiring rental rates.

	Number of Leases	Square Feet	Term/Years	Initial Rent Per Square Foot(1)		Expiring Rent Per Square Foot(2)		Average Rent Spread
New Leases(3)	696	1,962,928	8.3	$	62.29	$	50.52	$	11.77
Renewal Leases	924	2,765,941	5.2	$	59.95	$	58.66	$	1.29
New/Renewal Leases	1,620	4,728,869	6.5	$	60.92	$	55.19	$	5.73

(1) Represents initial rent or average rent over the term consisting of base minimum rent, common area costs and real estate taxes.

(2) Represents expiring rent at end of lease consisting of base minimum rent, common area costs and real estate taxes.

(3) Represents new leases where downtime between the new and old tenant in the suite was less than nine months.

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Results of Operations

Three months ended September 30, 2012 and 2011

The following table summarizes minimum rents for the three months ended September 30, 2012 and 2011.

	Three Months Ended September 30,
	2012			2011			$ Change			% Change
Components of Minimum rents:
Base minimum rents	$	404,169		$	389,762		$	14,407		3.7	%
Lease termination income	1,375			2,327			(952		)	(40.9	)
Straight-line rent	18,384			22,782			(4,398		)	(19.3	)
Above- and below-market tenant leases, net	(22,669		)	(31,330		)	8,661			(27.6	)
Total Minimum rents	$	401,259		$	383,541		$	17,718		4.6	%

Base minimum rents increased by $14.4 million primarily due to increased permanent occupancy and positive lease spreads as presented in the operating metrics section above.

Management fees and other corporate revenues primarily represent the revenues earned from the management of our joint venture properties.  Management fees and other corporate revenues increased $3.6 million primarily due to an increase in development and financing fees.

Other property operating costs decreased $5.7 million due to decreased payroll costs and decreased utility costs.

Property management and other costs represent regional and home office costs and includes items such as corporate payroll, rent for office space, supplies and professional fees, which represent corporate overhead costs not generated at the properties.  Property management and other costs decreased $6.6 million primarily due to reduced payroll and increased capitalized development overhead, which were partially offset by an increase in national marketing costs.

General and administrative costs represent the costs to run the public company and include costs for executives, audit fees, professional fees and administrative fees related to the public company and in 2011, also include bankruptcy costs or reimbursements incurred post-emergence.  General and administrative expenses decreased $5.4 primarily as a result of a decrease in professional fees and post-emergence bankruptcy costs and reimbursements.

Depreciation and amortization decreased $17.5 million primarily due to fully depreciated and written off tenant-specific in-place lease intangibles as tenants vacated prior to the end or upon expiration of their lease term during or prior to the three month period ended September 2012 as compared to during or prior to the three months ended September 2011 offset by increased building depreciation of $8.2 million.

Interest expense decreased $14.0 million due to lower interest expense of $9.9 million resulting from lower average interest rates obtained as a result of our refinancing activity since September 2011, as outlined in the Liquidity and Capital Resources section below, and prior period write-offs of debt market rate adjustments of $8.0 million. These decreases were partially offset by amortization of debt market rate adjustments of $1.8 million and financing transaction costs included in interest expense of $1.8 million.

The Warrant liability adjustment represents the non-cash income or expense recognized as a result of the change in the fair value of the Warrant liability (Note 8). We incurred expense of $123.4 million for the three months ended September 30, 2012 as the result of an increase in our stock price within the quarter which was partially offset by the effect of a decrease in implied volatility. We recognized income of $337.8 million for the three months ended September 30, 2011 as the result of a decrease in our stock price during the prior quarter which was partially offset by an increase in implied volatility.

The equity in income (loss) of Unconsolidated Real Estate Affiliates increased $12.3 million primarily due to a decrease in amortization expense related to our basis in our investment in Unconsolidated Real Estate Affiliates in the amount of $13.2 million.  This is offset partially by a decrease in income at our Brazil joint venture as a result of one-time gains from the sale of investment properties in 2011.

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We recorded provisions for impairment of $98.3 million on seven of our operating properties during the three months ended September 30, 2012 (Note 2).  These impairment charges are included in provision for impairment in our Consolidated Statements of Operations and Comprehensive Income (Loss).

No impairment charges were necessary during the three months ended September 30, 2011.

Nine months ended September 30, 2012 and 2011

The following table summarizes minimum rents for the nine months ended September 30, 2012 and 2011.

	Nine Months Ended September 30,
	2012			2011			$ Change			% Change
Components of Minimum rents:
Base minimum rents	$	1,188,301		$	1,158,155		$	30,146		2.6	%
Lease termination income	8,192			7,745			447			5.8
Straight-line rent	49,406			69,285			(19,879		)	(28.7	)
Above- and below-market tenant leases, net	(70,534		)	(76,706		)	6,172			(8.0	)
Total Minimum rents	$	1,175,365		$	1,158,479		$	16,886		1.5	%

Base minimum rents increased by $30.1 million primarily due to increased permanent occupancy and positive lease spreads as well as presented in the operating metrics section above.

Management fees and other corporate revenues primarily represent the revenues earned from the management of our joint venture properties.  Management fees and other corporate revenues increased $11.9 million primarily due to an increase in development and financing fees.

Property maintenance costs decreased $9.0 million due to a decrease in labor costs and lower snow removal costs as a result of a mild winter, and were partially offset by higher costs for certain contracted services.

Other property operating costs decreased $4.5 million due to decreased payroll costs and decreased utility costs.

Property management and other costs represents regional and home office costs and include items such as corporate payroll, rent for office space, supplies and professional fees, which represent corporate overhead costs not generated at the properties.  Property management and other costs decreased $18.2 million primarily due to reduced payroll and severance costs incurred in 2011 that were reduced or did not occur in 2012.  In addition, there was an increase in capitalized development overhead, which was partially offset by increased legal services and national marketing costs.

General and administrative costs represent the costs to run the public company and include executive costs, audit fees, professional fees and administrative fees related to the public company, and in 2011, also include bankruptcy costs or reimbursements incurred post-emergence.  General and administrative expenses increased $13.6 million primarily due to the reversal during the nine months ended September 30, 2011 of a previously accrued bankruptcy cost of $18.0 million and gains on bankruptcy settlements.  Excluding this item, general and administrative costs decreased due to a decrease in professional fees and post-emergence bankruptcy costs and reimbursements.

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Depreciation and amortization decreased $63.3 million primarily due to more fully depreciated and written off tenant-specific in-place lease intangibles as tenants vacated prior to the end of their lease term in 2011 versus 2012.  This is offset by increased building depreciation of $8.2 million as a result of the demolition of a building.

Interest expense decreased $65.0 million primarily due to default interest incurred on the Homart Note and the 2006 Credit Facility totaling $59.9 million (Note 14) during the nine months ended September 30, 2011. Additionally, we incurred less interest expense related to our mortgage debt due to lower average interest rates obtained as a result of our refinancing activity since September 2011, as outlined in the Liquidity and Capital Resources section below. These decreases were partially offset by write-offs of debt market rate adjustments that increased interest expense $12.1 million.

The Warrant liability adjustment represents the non-cash income or expense recognized as a result of the change in the fair value of the Warrant liability (Note 8). We incurred expense of $413.1 million for the nine months ended September 30, 2012 as the result of an increase in our stock price from December 31, 2011, which was partially offset by the effects of a decrease in implied volatility. We recognized income of $319.5 million during the nine months ended September 30, 2011, as the result of a decrease from December 31, 2010, in our stock price which was partially offset by an increase in implied volatility.

The equity in income (loss) of Unconsolidated Real Estate Affiliates increased $42.4 million primarily due to a decrease in amortization expense due to less tenant-specific intangibles and basis adjustments in our investment in Unconsolidated Real Estate Affiliates in the amount of $19.4 million, a decrease in interest expense of $6.1 million as a result of refinancing activity at our joint ventures, and growth in property operations and gains from the purchase of additional interest in and sale of investment properties of $4.6 million at our Brazil joint venture.  The remaining increase is due to improved operations at all of our joint ventures.

We recorded impairment charges of $118.6 million on nine of our operating properties during the nine months ended September 30, 2012 (Note 2).  Of these impairment charges, $98.3 million related to seven of our operating properties and were recorded during the three months ended September 30, 2012, as noted above.  These impairment charges are included in provision for impairment in our Consolidated Statements of Operations and Comprehensive Income (Loss).

The remaining two impairment charges of $20.3 million, that were previously recorded, related to two regional malls and were recorded during the nine months ended September 30, 2012 (Note 2).  These impairment charges are included, net of the gain on forgiveness of debt of $9.9 million, in discontinued operations in our Consolidated Statements of Operations and Comprehensive Income (Loss).

No impairment charges were necessary during the nine months ended September 30, 2011.

Liquidity and Capital Resources

Our primary uses of cash include payment of operating expenses, working capital, debt service, including principal and interest, reinvestment in properties, redevelopment of properties, tenant allowances and dividends.  Our primary sources of cash include operating cash flows, including our share of cash flows produced by our Unconsolidated Real Estate Affiliates, incremental cash from refinancings and borrowings under our revolving credit facility.

Our capital plan is to obtain financial flexibility by lowering our borrowing costs, managing our future maturities, eliminating cross collateralizations and corporate guarantees and providing the necessary capital to fund growth.  We believe that we currently have sufficient liquidity to satisfy all of our commitments in the form of $637.9 million of unrestricted cash and $1.00 billion of available credit under our credit facility as of September 30, 2012, as well as anticipated cash provided by operations. The credit facility has an uncommitted accordion feature for a total facility of up to $1.25 billion and a term of four years.  The facility bears interest at LIBOR plus 225 basis points and is determined by the Company’s leverage level.

Our key financing and capital raising objectives include the following:

·continue to refinance our maturing debt, and certain debt prepayable without penalty, with the goal of lowering our overall borrowing costs and managing future maturities; and

·dispose of properties in our portfolio that do not fit within our long-term strategy, including certain of our office properties, retail strip centers and regional malls.

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We may also raise capital through public or private issuances of debt securities, preferred stock, common stock, common units of the Operating Partnership or other capital raising activities.

During 2012, we executed the following refinancing and capital transactions (at our proportionate share):

·on January 12, 2012, we distributed our shares in RPI to the GGP shareholders of record as of the close of business on December 30, 2011, decreasing our outstanding mortgage loans by $1.12 billion;

·through September 30, 2012, we refinanced $5.18 billion of mortgage notes at an average interest rate of 4.33% and average term of 9.2 years.  The average interest rate of the original loans was 5.63% and the remaining term-to-maturity was 2.5 years.  These refinancings included the financings of Ala Moana, a $1.4 billion secured interest-only mortgage note, The Grand Canal Shoppes/The Shoppes at The Palazzo, a $625.0 million secured financing and the $763.5 million secured financings of five consolidated properties (Note 6);

·repaid $349.0 million of corporate unsecured debt that matured in September 2012; and

·we sold our interests in one anchor box, four regional malls, five strip centers, one office building and one office portfolio for an aggregate $311.3 million with net proceeds of $143.2 million.

As of September 30, 2012, we have approximately $6 billion of debt pre-payable at par.  We may pursue opportunities to refinance this debt at better terms.  Our long term goal is to improve our overall debt to earnings before interest, taxes and depreciation and amortization, or EBITDA, and leverage ratios by improving operations, amortization of debt and refinancing debt at improved terms.

As a result of our efforts and objectives noted above, the total debt maturing through 2016 has decreased to 39% as of September 30, 2012 from 52% as of June 30, 2012.

As of September 30, 2012, our proportionate share of total debt, including the Junior Subordinated Notes, aggregated $19.14 billion.  Our total debt consists of our share of consolidated debt of $16.20 billion, of which $14.66 billion is secured and $1.54 billion is corporate unsecured, $2.94 billion of our share of the secured debt of our Unconsolidated Real Estate Affiliates. Of the total consolidated debt, $2.86 billion is recourse to the Company due to guarantees or other security provisions for the benefit of the note holder.

Our corporate unsecured debt is comprised of $1.30 billion of bonds with maturity dates from 2013 through November 2015, $206.2 million of Junior Subordinated Notes which are due in 2041 and a $20.8 million note payable to HHC which is due in 2015.  We repaid the $349.5 million of the bonds on September 17, 2012, when they matured, with available cash on hand (noted above). Certain of our subsidiaries intend to redeem all of their 6.75% bonds due May 1, 2013 (approximately $600.0 million) on December 3, 2012, at the “Make-Whole Price,” as defined in the applicable indenture.

The following table illustrates the scheduled loan maturities of our proportionate share of total debt as of September 30, 2012.  We do not have any debt that is scheduled to mature in the fourth quarter of 2012.  As noted above, the $206.2 million of Junior Subordinated Notes are due in 2041, but we may redeem them any time after April 30, 2011 (Note 6).  As we do not expect to redeem the notes prior to maturity, they are included in the consolidated debt maturing subsequent to 2016.  Of the $8.58 billion of consolidated debt that matures in the subsequent period, $2.08 billion matures in 2017 and $189.2 million matures in 2018.

	Consolidated*		Unconsolidated*
2013	$	978,415	$	146,426
2014	1,498,960		138,168
2015	1,302,160		213,735
2016	2,249,269		—
Subsequent	8,577,765		1,986,085
	$	14,606,569	$	2,484,414

* Excludes $29.6 million of adjustments related to special improvement district liabilities and market rate adjustments, and Brazil.

We generally believe that we will be able to extend the maturity date or refinance the consolidated debt that is scheduled to mature in 2012 and 2013.  We also believe that the joint ventures will be able to refinance the debt of our Unconsolidated Real Estate Affiliates that mature in 2012; however, there can be no assurance that we

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will be able to refinance or restructure such debt on acceptable terms or otherwise, or that joint venture operations or contributions by us and/or our partners will be sufficient to repay such loans.

During the three months ended September 30, 2012, as required per the terms of the Warrant Agreement, Fairholme gave notice of their intent to exercise their Warrants.  As discussed in Note 8, the Warrants require a 90 day notification period prior to exercise. Fairholme is not required to exercise its Warrants as a result of the notice at any time after the 90 day period and before the maturity of the Warrants. If Fairholme had exercised their Warrants as of September 30, 2012, based on the stock price at that date, the impact would be a reduction of approximately $483 million on the $1.4 billion liability on the Consolidated Balance Sheet and an approximately $26 million reduction on the warrant liability adjustment on the Consolidated Statements of Operations and Comprehensive Income (Loss). The weighted average number of shares would have increased by approximately 23 million shares.

Redevelopments

We are currently redeveloping several consolidated and unconsolidated properties with our joint venture partners primarily to convert large-scale anchor boxes into smaller leasable areas and to create new in-line retail space and new restaurant venues.  These redevelopments represent organic growth with double-digit returns on investment (first year stabilized).  Projects include Fashion Show, Glendale Galleria, North Point, Northridge Fashion Center and Oakbrook Center and are expected to be completed in 2012 and 2013.  We expect to incur costs associated with these and other redevelopment projects of approximately $215 million at our proportionate share and plan to fund these costs with available cash flow from us and our joint venture partners.  We continue to evaluate a number of other redevelopment prospects to further enhance the quality of our assets.  As part of our overall strategy we may:

·opportunistically acquire whole or partial interests in high-quality regional malls and anchor pads that improve the overall quality of our portfolio; and

·execute redevelopment projects within our portfolio identified as providing compelling risk-adjusted returns on investment.

Capital Expenditures

We have incurred capital expenditures of $87.0 million for the nine months ended September 30, 2012 and $40.2 million for the nine months ended September 30, 2011, which primarily relate to ordinary capital projects at our operating properties and the implementation of certain information systems at our corporate and regional offices.  In addition, we incurred tenant allowances and capitalized leasing costs for our operating properties of $103.0 million for the nine months ended September 30, 2012 and $77.6 million for the nine months ended September 30, 2011.

Dividends

Our Board of Directors declared common stock dividends during 2012 as follows:

Declaration Date	Record Date	Date Payable or Paid	Dividend Per Share
August 1, 2012	October 15, 2012	October 29, 2012	$	0.11
May 1, 2012	July 16, 2012	July 30, 2012	0.10
February 27, 2012	April 16, 2012	April 30, 2012	0.10

On December 20, 2011, the Board of Directors approved the distribution of RPI in the form of a special dividend for which GGP shareholders were entitled to receive approximately 0.0375 shares of RPI common stock for each share of GGP Common Stock held as of December 30, 2011.  RPI’s net equity was recorded as of December 31, 2011 as a dividend payable as substantive conditions for the spin-off were met as of December 31, 2011 and it was probable that the spin-off would occur.  On January 12, 2012, we distributed our shares in RPI to the GGP shareholders of record as of the close of business on December 30, 2011.  As of December 31, 2011, we had recorded a distribution payable of $526.3 million and a related decrease in retained earnings (accumulated deficit), of which $426.7 million relates to the special dividend, on our Consolidated Balance Sheet.  This special dividend satisfied part of our 2011 and the 2012 REIT distribution requirements.  We adjusted the distribution in retained earnings (accumulated deficit) by $26.0 million to reflect the net change in RPI’s net assets as of the date of the spin-off.

Summary of Cash Flows

Cash Flows from Operating Activities

Net cash provided by operating activities was $607.3 million for the nine months ended September 30, 2012 and $395.8 million for the nine months ended September 30, 2011.  Significant components of net cash provided by operating activities include:

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·the 2012 decrease in accounts payable and accrued expenses of $(48.9) million primarily attributable to the payment of the accrued RPI dividend of $426.7 million;

·the 2012 increase in restricted cash of $62.7 million primarily attributable to the spin-off of RPI as well as the release of escrows resulting from refinancing; and

·in 2011, the decrease in accounts payable and accrued expenses of $(123.0) million primarily attributable to the approximately $115 million payment of the key employee incentive plan, which provided for payment to certain key employees upon successful emergence from bankruptcy, during the first quarter of 2011.

Cash Flows from Investing Activities

Net cash (used in) provided by investing activities was $(156.6) million for the nine months ended September 30, 2012 and $246.5 million for the nine months ended September 30, 2011.  Significant components of net cash used in investing activities include:

·The 2012 acquisition of interests in 11 Sears anchor pads, $(270.0) million, (Note 3);

·The acquisition of the remaining 49% of The Oaks and Westroads, which were previously owned through a joint venture, $(98.3) million (Note 3);

·Proceeds from the disposition of 11 investment properties, $192.4 million (Note 4);

·2012 distributions received from Unconsolidated Real Estate Affiliates in excess of income primarily related to distributions received from three of our joint ventures $289.4 million;

·in 2011, proceeds primarily from the sale of 12 investment properties and a property and cash exchange with a third party, $446.8 million; and

·in 2011, acquisition/development costs of $180.5 million, primarily related to two anchor acquisitions and redevelopment projects at existing properties.

Cash Flows from Financing Activities

Net cash used in financing activities was $(385.6) million for the nine months ended September 30, 2012 and $(1.17) billion for the nine months ended September 30, 2011.  Significant components of net cash used in financing activities include:

·in 2012, refinanced mortgage notes or obtained new a new mortgage note resulting in net proceeds of $3.89 billion, which were offset by $4.02 billion of principal payments;

·in 2012, the cash distribution paid to common stockholders of $(281.1) million, which were offset by the cash distributions reinvested in common stock via the DRIP of $43.8 million;

·in 2011, the purchase and cancellation of common stock of $(543.0) million;

·in 2011 principal payments and refinancing of our mortgages, notes and loans payable $(455.0) million, net;

·in 2011, the cash distributions paid to common stockholders of $(225.8) million; which were offset by cash distributions reinvested in common stock via the DRIP of $80.7 million.

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 2012, and such policies, and the discussion of such policies, are incorporated herein by reference.

REIT Requirements

In order to remain qualified as a REIT for federal income tax purposes, we must distribute or pay tax on 100% of our capital gains and distribute at least 90% of our ordinary taxable income to stockholders.  See Note 7 to the consolidated financial statements for more detail on our ability to remain qualified as a REIT.

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Recently Issued Accounting Pronouncements

None.

Non-GAAP Supplemental Financial Measures and Definitions

Net Operating Income (“NOI”) and Company NOI

The Company believes NOI is a useful supplemental measure of the Company’s operating performance. The Company defines NOI as operating revenues (rental income, tenant recoveries and other income) less property and related expenses (real estate taxes, property maintenance costs, marketing, other property expenses and provision for doubtful accounts).  NOI has been reflected on a proportionate basis (at the Company’s ownership share).  Other REITs may use different methodologies for calculating NOI, and accordingly, the Company’s NOI may not be comparable to other REITs.  Because NOI excludes general and administrative expenses, interest expense, retail investment property impairment or non-recoverable development costs, depreciation and amortization, gains and losses from property dispositions, allocations to noncontrolling interests, strategic initiatives, provision for income taxes, discontinued operations and extraordinary items, it provides a performance measure that, when compared year over year, reflects the revenues and expenses directly associated with owning and operating commercial real estate properties and the impact on operations from trends in occupancy rates, rental rates and operating costs.  This measure provides an operating perspective not immediately apparent from GAAP operating or net income (loss) attributable to common stockholders.  The Company uses NOI to evaluate its operating performance on a property-by-property basis because NOI allows the Company to evaluate the impact that factors such as lease structure, lease rates and tenant base, which vary by property, have on the Company’s operating results, gross margins and investment returns.

In addition, management believes NOI provides useful information to the investment community about the Company’s operating performance. However, due to the exclusions noted above, NOI should only be used as an alternative measure of the Company’s financial performance.

Company NOI (previously defined as Core NOI) excludes the NOI impacts of non-cash items such as straight-line rent and intangible asset and liability amortization resulting from acquisition accounting.  Mall NOI is Company NOI from our mall portfolio.  We present Company NOI and Company FFO (as defined below), as we believe certain investors and other users of our financial information use them as measures of the Company’s historical operating performance.

Funds From Operations (“FFO”) and Company FFO

The Company determines FFO based upon the definition set forth by National Association of Real Estate Investment Trusts (“NAREIT”).  The Company determines FFO to be our share of consolidated net income (loss) computed in accordance with GAAP, excluding real estate related depreciation and amortization, excluding gains and losses from extraordinary items, excluding cumulative effects of accounting changes, excluding gains and losses from the sales of, or any impairment charges related to, previously depreciated operating properties, plus the allocable portion of FFO of unconsolidated joint ventures based upon our economic ownership interest, and all determined on a consistent basis in accordance with GAAP.  As with our presentation of NOI, FFO has been reflected on a proportionate basis.

The Company considers FFO a supplemental measure for equity REITs and a complement to GAAP measures because it facilitates an understanding of the operating performance of the Company’s properties.  FFO does not give effect to real estate depreciation and amortization since these amounts are computed to allocate the cost of a property over its useful life.  Since values for well-maintained real estate assets have historically increased or decreased based upon prevailing market conditions, the Company believes that FFO provides investors with a clearer view of the Company’s operating performance.

As with our presentation of Company NOI, Company FFO (previously defined as Core FFO) excludes from FFO certain items that are non-cash and certain non-comparable items such as our Company NOI adjustments, and FFO items such as FFO from discontinued operations, warrant liability adjustment, and interest expense on debt repaid or settled, all as a result of our emergence, acquisition accounting and other capital contribution or restructuring events. Total Company FFO is Company FFO including Company FFO from discontinued operations excluding Company FFO from the spin-off of Rouse Properties, Inc., which is also included in discontinued operations.

Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures

The Company presents NOI and FFO as they are financial measures widely used in the REIT industry.  In order to provide a better understanding of the relationship between our non-GAAP financial measures of NOI, Company NOI, FFO and Company FFO, reconciliations have been provided as follows: a reconciliation of Company NOI and NOI to GAAP operating income (loss) GAAP net income (loss) attributable to common

37

stock holders; a reconciliation of Company FFO and FFO to GAAP net income (loss) attributable to common stockholders has been provided.  None of our non-GAAP financial measures represents cash flow from operating activities in accordance with GAAP, none should be considered as an alternative to GAAP net income (loss) attributable to common stockholders and none are necessarily indicative of cash available to fund cash needs.  In addition, the Company has presented such financial measures on a consolidated and unconsolidated basis (at the Company’s ownership share) as the Company believes that given the significance of the Company’s operations that are owned through investments accounted for on the equity method of accounting, the detail of the operations of the Company’s unconsolidated properties provides important insights into the income and FFO produced by such investments for the Company as a whole.

The following tables reconcile Company NOI to operating income (dollars in thousands) for the three and nine months ended September 30, 2012 and 2011:

	For the three months ended September 30,
	2012			2011
Company NOI	$	526,857		$	508,110
Company NOI adjustments:
Straight-line rent	22,604			28,737
Above- and below-market leases amortization, net	(27,517		)	(36,855		)
Real estate tax stabilization agreement	(1,578		)	(1,578		)
Amortization of below-market ground leases	(1,592		)	(1,604		)
Total Company NOI adjustments	(8,083		)	(11,300		)
NOI	518,774			496,810
Less: Company NOI of Unconsolidated Properties	(95,253		)	(91,905		)
Management fees and other corporate revenues	17,823			14,188
Property management and other costs	(38,903		)	(45,455		)
General and administrative	(10,045		)	(15,441		)
Provision for impairment	(98,288		)	—
Depreciation and amortization	(208,833		)	(226,360		)
Noncontrolling interest in NOI of Consolidated Properties and other	2,468			3,592
Operating income	$	87,743		$	135,429

	For the nine months ended September 30,
	2012			2011
Company NOI	$	1,565,610		$	1,499,236
Company NOI adjustments:
Straight-line rent	64,224			86,383
Above- and below-market leases amortization, net	(83,681		)	(92,862		)
Real estate tax stabilization agreement	(4,734		)	(4,734		)
Amortization of below-market ground leases	(4,787		)	(4,841		)
Total Company NOI adjustments	(28,978		)	(16,054		)
NOI	1,536,632			1,483,182
Less: Company NOI of Unconsolidated Properties	(292,116		)	(268,371		)
Management fees and other corporate revenues	55,646			43,775
Property management and other costs	(119,350		)	(137,517		)
General and administrative	(31,675		)	(18,065		)
Provision for impairment	(98,288		)	—
Depreciation and amortization	(612,188		)	(675,536		)
Noncontrolling interest in NOI of Consolidated Properties and other	9,002			9,584
Operating income	$	447,663		$	437,052

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The following tables reconcile Company FFO and FFO to net loss attributable to common stockholders (dollars in thousands) for the three and nine months ended September 30, 2012 and 2011:

	For the three months ended September 30,
	2012			2011
Company FFO	$	230,994		$	206,460
Company FFO adjustments:
Company NOI adjustments	(8,083		)	(11,300		)
Management fees and other corporate revenues	—			11
Property management and other costs(1)	424			(5,308		)
General and administrative(1)	—			(4,015		)
Interest expense(2)	11,637			2,260
Warrant liability adjustment	(123,381		)	337,781
Provision for income taxes	(2,537		)	(3,919		)
FFO from discontinued operations	1,275			18,335
Total Company FFO adjustments	(120,665		)	333,845
Pro rata FFO	110,329			540,305
Depreciation and amortization of capitalized real estate costs	(234,548		)	(268,297		)
Gains on sales of investment properties	12,302			5,799
Noncontrolling interests in depreciation of Consolidated Properties	1,624			1,559
Provision for impairment excluded from FFO	(98,288		)	—
Redeemable noncontrolling interests	1,603			(1,810		)
Depreciation and amortization of discontinued operations	(909		)	(25,506		)
Net (loss) income attributable to common stockholders	$	(207,887	)	$	252,050

(1) Non-comparable costs include bankruptcy-related items such as the reversal of previously accrued bankruptcy costs and gains on settlements, partially offset by legal, professional fees and other restructuring costs.

(2) Interest expense adjustments include default interest, interest expense relating to extinguished debt, mark-to-market adjustments on debt, write-off of mark-to-market adjustments on extinguished debt, and debt extinguishment expenses.

	For the nine months ended September 30,
	2012			2011
Company FFO	$	677,585		$	594,159
Company FFO adjustments:
Company NOI adjustments	(28,978		)	(16,054		)
Management fees and other corporate revenues	—			412
Property management and other costs(1)	1,272			(15,704		)
General and administrative(1)	—			15,485
Preferred unit distributions	(3,098		)	—
Interest expense(2)	41,571			(15,167		)
Warrant liability adjustment	(413,081		)	319,460
Provision for income taxes	(5,823		)	(7,991		)
FFO from discontinued operations	17,476			64,376
Total Company FFO adjustments	(390,661		)	344,817
Pro rata FFO	286,924			938,976
Depreciation and amortization of capitalized real estate costs	(727,760		)	(815,455		)
Gain from change in control of investment properties	18,547			—
Gain on sales of investment properties	17,634			8,423
Noncontrolling interests in depreciation of Consolidated Properties	5,347			5,569
Provision for impairment excluded from FFO	(98,288		)	—
Provision for impairment excluded from FFO of discontinued operations	(10,393		)	—
Redeemable noncontrolling interests	3,753			(386		)
Depreciation and amortization of discontinued operations	(9,201		)	(82,461		)
Net (loss) income attributable to common stockholders	$	(513,437	)	$	54,666

(1) Non-comparable costs include bankruptcy-related items such as the reversal of previously accrued bankruptcy costs and gains on settlements, partially offset by legal, professional fees and other restructuring costs.

(2) Interest expense adjustments include default interest, interest expense relating to extinguished debt, mark-to-market adjustments on debt, write-off of mark-to-market adjustments on extinguished debt, and debt extinguishment expenses.

ITEM 3QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

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ITEM 4MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15(d)-15(e) under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”)).  Based on that evaluation, the CEO and the CFO have concluded that our disclosure controls and procedures are effective.

Internal Control over Financial Reporting

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

PART IIOTHER INFORMATION

ITEM 1LEGAL PROCEEDINGS

Other than certain remaining claims related to or arising from our Chapter 11 cases described in this Quarterly Report (see Note 14 to the consolidated financial statements), 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.

Urban Litigation

In October 2004, certain limited partners (the “Urban Plaintiffs”) of Urban Shopping Centers, L.P. (“Urban”) filed a lawsuit against Urban’s general partner, Head Acquisition, L.P. (“Head”), as well as TRCLP, Simon Property Group, Inc., Westfield America, Inc., and various of their affiliates, including Head’s general partners (collectively, the “Urban Defendants”), in Circuit Court in Cook County, Illinois. The Predecessor, GGPLP and other affiliates were later included as Urban Defendants. The lawsuit alleges, among other things, that the Urban Defendants breached the Urban partnership agreement, unjustly enriched themselves through misappropriation of partnership opportunities, failed to grow the partnership, breached their fiduciary duties, and tortiously interfered with several contractual relationships. The plaintiffs seek relief in the form of unspecified monetary damages, equitable relief and injunctive relief, the last of which would require the Urban Defendants, including the Predecessor and its affiliates, to engage in certain future transactions through the Urban Partnership. The case is currently in expert discovery; certain fact discovery matters are on appeal to the Illinois Supreme Court. John Schreiber, one of our directors, serves on the board of directors of, and is an investor in, an entity that is a principal investor in the Urban Plaintiffs, and is himself an investor in the Urban Plaintiffs and, therefore, has a financial interest in the outcome of the litigation that is adverse to us. While we do not believe that this litigation will have a material adverse effect on us, we are disclosing its existence due to Mr. Schreiber’s interest in the case.

Tax Indemnification Liability

Pursuant to the Investment Agreements, we have indemnified HHC from and against 93.75% of any and all losses, claims, damages, liabilities and reasonable expenses to which HHC and its subsidiaries become subject, in each case solely to the extent directly attributable to MPC Taxes (as defined in the Investment Agreements) in an amount up to $303.8 million.  Under certain circumstances, we agreed to be responsible for interest or penalties attributable to such MPC Taxes in excess of the $303.8 million.  As a result of this indemnity, The Howard Hughes Company, LLC and Howard Hughes Properties, Inc. filed petitions in the United States Tax Court on May 6, 2011, contesting this liability.  Trial is expected in November 2012; however, a decision is not expected until late 2013. We have accrued $303.8 million as of September 30, 2012 and December 31, 2011 related to the tax indemnification liability.  In addition, we have accrued $21.6 million of interest related to the tax indemnification liability in accounts payable and accrued expenses on our Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011.  The aggregate liability of $325.4 million represents management’s best estimate of our liability as of September 30, 2012, which will be periodically evaluated in

40

the aggregate.  We do not expect to make any significant payments on the tax indemnification liability within the next 12 months.

ITEM 1ARISK FACTORS

There are no material changes to the risk factors previously disclosed in our Annual Report, with the exception of the risk factors below.

Our ownership may change as a result of the exercise of the outstanding warrants by the Plan Sponsors:

As of September 30, 2012, the effect of the exercise of all of the outstanding 120,000,000 warrants for 133,116,000 issuable shares of common stock, assuming the election to net settle the warrants in shares as allowed per the agreement, would increase the number of shares outstanding by 67,659,214 shares from 938,619,521 to 1,006,278,735. Further, the exercise of the warrants would result in an increase in the number of shares outstanding of the ownership of the Plan Sponsors and Blackstone from 50% to 54%.

We may not be able to refinance, extend or repay our Consolidated debt or our portion of indebtedness of our Unconsolidated Real Estate Affiliates

As of September 30, 2012, our proportionate share of total debt, including the Junior Subordinated Notes, aggregated $19.14 billion consisting of our consolidated debt, net of noncontrolling interest, of $16.20 billion combined with our share of the debt of our Unconsolidated Real Estate Affiliates of $2.94 billion.  There are no additional amounts maturing in 2012.  Of our proportionate share of total debt, $2.86 billion is recourse to the Company due to guarantees or other security provisions for the benefit of the note holder.  There can be no assurance that we, or the joint venture, will be able to refinance or restructure this debt on acceptable terms or otherwise, or that operations of the properties or contributions by us and/or our partners will be sufficient to repay such loans.  If we or the joint venture cannot service this debt, we or the joint venture may have to deed property back to the applicable lenders.

ITEM 2UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3DEFAULTS UPON SENIOR SECURITIES

None

ITEM 5OTHER INFORMATION

None

ITEM 6EXHIBITS

31.1Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

99.1Consolidated Financial Information of GGP-TRC, LLC, a subsidiary of General Growth Properties, Inc.

101The following financial information from General Growth Properties, Inc.’s. Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, has been filed with the SEC on November 5, 2012, formatted in XBRL (Extensible Business Reporting Language): (1) Consolidated Balance Sheets, (2) Consolidated Statements of Operations and Comprehensive Income (Loss), (3) Consolidated Statements of Equity, (4) Consolidated Statements of Cash Flows and (5) Notes to Consolidated Financial Statements, tagged as blocks of text.  Pursuant to Rule 406T of Regulation S-T, this

41

information is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and is not otherwise subject to liability under these sections.

Pursuant to Item 601(b)(4)(iii) 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 September 30, 2012.  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: November 5, 2012	By:	/s/ Michael Berman
		Michael Berman
		Chief Financial Officer
		(on behalf of the Registrant and as Principal Financial Officer)

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EXHIBIT INDEX

31.1Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

99.1Consolidated Financial Information of GGP-TRC, LLC, a subsidiary of General Growth Properties, Inc.

101 *The following financial information from General Growth Properties, Inc’s. Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, has been filed with the SEC on November 5, 2012, formatted in XBRL (Extensible Business Reporting Language): (1) Consolidated Balance Sheets, (2) Consolidated Statement of Operations and Comprehensive Income (Loss), (3) Consolidated Statements of Equity, (4) Consolidated Statements of Cash Flows and (5) Notes to Consolidated Financial Statements, tagged as blocks of text.

* Pursuant to Rule 406T of Regulation S-T, this information is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and is not otherwise subject to liability under these sections.

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EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Sandeep Mathrani, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: November 5, 2012	/s/ Sandeep Mathrani
	Sandeep Mathrani
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Michael Berman, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: November 5, 2012	/s/ Michael Berman
	Michael Berman
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of General Growth Properties, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Sandeep Mathrani, in my capacity as Chief Executive Officer of the Company, do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Sandeep Mathrani

Sandeep Mathrani

Chief Executive Officer

November 5, 2012

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of General Growth Properties, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael Berman, in my capacity as Chief Financial Officer of the Company, do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Michael Berman

Michael Berman

Chief Financial Officer

November 5, 2012

EX-99.1

Exhibit 99.1

GGP - TRC, L.L.C., A SUBSIDIARY OF GENERAL GROWTH PROPERTIES, INC.

The following is unaudited consolidated financial information for our subsidiary, GGP —TRC, L.L.C, (“TRCLLC”),  formerly known as The Rouse Company L.L.C., as of September 30, 2012 and December 31, 2011 and for the nine months ended September 30, 2012 and 2011.

TRCLLC (also, “we” or “us”) is a Delaware limited liability company, formed on November 9, 2010 through voluntary conversion of The Rouse Company Limited Partnership (“TRCLP”) into a limited liability company. TRCLLC is a subsidiary of General Growth Properties, Inc. (“GGP” or the “Company”), a Delaware corporation, which was organized in July 2010 and is a self-administered and self-managed real estate investment trust, referred to as a “REIT”.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of TRCLLC, its subsidiaries and joint ventures in which it has a controlling interest. For consolidated joint ventures, the noncontrolling partner’s share of the assets, liabilities and operations of the joint ventures (generally computed as the joint venture partner’s ownership percentage) is included in noncontrolling interests in consolidated real estate affiliates as a permanent element of capital. All significant intercompany balances and transactions have been eliminated.

Reclassifications

Certain prior period amounts in the consolidated financial statements have been reclassified to conform to the current period presentation as a result of discontinued operations.  TRCLLC distributed various operating properties to GGP and sold its interest in an office portfolio during the nine months ended September 30, 2012.  Amounts included on the Consolidated Statements of Operations and Comprehensive Loss for properties sold or distributed to GGP have been reclassified to discontinued operations for all periods presented.

Critical Accounting Policies

Critical accounting policies are those that are both significant to the overall presentation of TRCLLC’s financial condition and results of operations and require management to make difficult, complex or subjective judgments.  Our critical accounting policies for the fiscal year ended December 31, 2011 have not changed during the nine months ended September 30, 2012.

MANAGEMENT’S DISCUSSION OF TRCLLC OPERATIONS AND LIQUIDITY

The following table summarizes minimum rents for the nine months ended September 30, 2012 and 2011.

	Nine Months Ended September 30,
	2012			2011			$ Change			% Change
	(Dollars in thousands)
Components of Minimum rents:
Base minimum rents	$	205,865		$	197,376		$	8,489		4.3	%
Lease termination income	517			2,399			(1,882		)	(78.4	)
Amortization of straight-line rent	9,090			11,242			(2,152		)	(19.1	)
Amortization of above- and below-market tenant leases, net	(11,688		)	(8,983		)	(2,705		)	30.1
Total Minimum rents	$	203,784		$	202,034		$	1,750		0.9	%

Base minimum rents increased by $8.5 million primarily due to increased permanent occupancy and positive lease spreads.

Expenses decreased by $16.7 million primarily due to a $17.9 million decrease in depreciation and amortization and an $11.6 million decrease in property management and other costs partially offset by provision for impairment of $13.8 million recorded on two operating properties.  These impairment charges were recorded as the estimated sales prices of these properties were less than the carrying values.  No impairment charges were necessary during the nine months ended September 30, 2011.

Equity in income of Unconsolidated Real Estate Affiliates for the nine months ended September 30, 2012 increased by $17.4 million from 2011, primarily due to a decrease in amortization expense as a result of less tenant-specific intangibles as well as adjustments to intangibles across our Unconsolidated Real Estate Affiliate in the amount of $6.1 million and growth in property operations and gains from the purchase of additional interest in and sale of investment properties of $4.6 million at our Brazil joint venture. The remaining increase is due to improved operations at all of our joint ventures.

T-1

Cash position and liquidity at September 30, 2012

TRCLLC’s cash and cash equivalents decreased $297.4 million to $145.2 million as of September 30, 2012. The cash position of TRCLLC is largely determined at any point in time by the relative short-term demands for cash by TRCLLC and GGP.

TRCLLC has $1.30 billion of unsecured bonds of with maturity dates from 2013 through November 2015 and interest rates ranging from 5.38% to 6.75%.  The bonds have covenants, including ratios of secured debt to gross assets and total debt to total gross assets. We are not aware of any instances of non-compliance with such covenants as of September 30, 2012. We repaid the $349.5 million of the bonds on September 17, 2012, when they matured. TRCLLC intends to redeem all of its 6.75% bonds due May 1, 2013 (approximately $600.0 million) on December 3, 2012, at the “Make-Whole Price,” as defined in the applicable indenture.

TRCLLC expects to remain current with respect to its debt obligations and be able to access additional funds as required from GGP.

T-2

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	September 30,			December 31,
	2012			2011
	(Dollars in thousands)
Assets:
Investment in real estate:
Land	$	532,809		$	901,274
Buildings and equipment	3,132,239			4,749,122
Less accumulated depreciation	(225,562		)	(251,137		)
Construction in progress	22,379			38,535
Net property and equipment	3,461,865			5,437,794
Investment in and loans to/from Unconsolidated Real Estate Affiliates	1,246,628			1,725,338
Net investment in real estate	4,708,493			7,163,132
Cash and cash equivalents	145,156			442,559
Accounts and notes receivable, net	34,729			45,894
Deferred expenses, net	24,484			39,057
Prepaid expenses and other assets	258,800			400,401
Total assets	$	5,171,662		$	8,091,043
Liabilities:
Mortgages, notes and loans payable	$	3,083,698		$	4,440,481
Accounts payable and accrued expenses	236,629			339,596
Total liabilities	3,320,327			4,780,077
Capital:
Members’ capital	4,265,618			6,118,338
Receivable from General Growth Properties, Inc.	(2,336,329		)	(2,778,910		)
Accumulated other comprehensive loss	(83,672		)	(48,470		)
Members’ capital attributable to General Growth Properties, Inc.	1,845,617			3,290,958
Noncontrolling interests in Consolidated Real Estate Affiliates	5,718			20,008
Total capital	1,851,335			3,310,966
Total liabilities and capital	$	5,171,662		$	8,091,043

T-3

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(UNAUDITED)

	Nine Months Ended September 30,
	2012			2011
	(Dollars in thousands)
Revenues:
Minimum rents	$	203,784		$	202,034
Tenant recoveries	101,034			103,823
Overage rents	5,041			4,132
Other	10,476			8,075
Total revenues	320,335			318,064
Expenses:
Real estate taxes	31,404			30,767
Property maintenance costs	11,114			12,987
Marketing	3,621			3,394
Other property operating costs	54,975			55,223
Provision for doubtful accounts	1,006			840
Property management and other costs	22,332			33,911
Provision for impairment	13,810			—
Depreciation and amortization	105,235			123,088
Total expenses	243,497			260,210
Operating income	76,838			57,854
Interest income	508			619
Interest expense	(140,092		)	(144,889		)
Loss before income taxes, equity in income of Unconsolidated Real Estate Affiliates, discontinued operations and allocation to noncontrolling interests	(62,746		)	(86,416		)
Provision for income taxes	(138		)	(311		)
Equity in income of Unconsolidated Real Estate Affiliates	28,054			10,697
Loss from continuing operations	(34,830		)	(76,030		)
Discontinued operations	13,005			17,051
Net loss	(21,825		)	(58,979		)
Allocation to noncontrolling interests	382			961
Net loss attributable to General Growth Properties, Inc.	$	(21,443	)	$	(58,018	)
Comprehensive loss:
Net loss	$	(21,825	)	$	(58,979	)
Other comprehensive loss:
Foreign currency translation	(35,202		)	(42,981		)
Other comprehensive loss	(57,027		)	(101,960		)
Comprehensive income allocated to noncontrolling interests	382			961
Comprehensive loss, net attributable to General Growth Properties, Inc.	$	(56,645	)	$	(100,999	)

T-4

CONSOLIDATED STATEMENTS OF CAPITAL

(UNAUDITED)

	Members’ Capital			Accumulated other comprehensive loss			Receivable from General Growth Properties, Inc.			Noncontrolling Interests in Consolidated Real Estate Affiliates			Total Capital
	(Dollars in thousands)
Balance at January 1, 2011	$	7,496,627		$	—		$	(2,812,817	)	$	21,416		$	4,705,226
Net loss	(58,018		)	—			—			(961		)	(58,979		)
Other comprehensive loss	—			(42,981		)	—			—			(42,981		)
Advances to General Growth Properties, Inc.	—			—			(524,548		)	—			(524,548		)
Distributions to General Growth Properties, Inc.	(449,877		)	—			59,855			—			(390,022		)
Distributions to noncontrolling interests in Consolidated Real Estate Affiliates	—			—			—			(145		)	(145		)
Balance at September 30, 2011	$	6,988,732		$	(42,981	)	$	(3,277,510	)	$	20,310		$	3,688,551
Balance at January 1, 2012	$	6,118,338		$	(48,470	)	$	(2,778,910	)	$	20,008		$	3,310,966
Net loss	(21,443		)	—			—			(382		)	(21,825		)
Other comprehensive loss	—			(35,202		)	—			—			(35,202		)
Advances from General Growth Properties, Inc.	—			—			90,729			—			90,729
Distributions to General Growth Properties, Inc.	(1,831,277		)	—			351,852			(13,901		)	(1,493,326		)
Distributions to noncontrolling interests in Consolidated Real Estate Affiliates	—			—			—			(7		)	(7		)
Balance at September 30, 2012	$	4,265,618		$	(83,672	)	$	(2,336,329	)	$	5,718		$	1,851,335

T-5

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine Months Ended September 30,
	2012			2011
	(Dollars in thousands)
Cash flows from operating activities:
Net loss	$	(21,825	)	$	(58,979	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Equity in income of Unconsolidated Real Estate Affiliates	(28,054		)	(5,669		)
Provision for (recovery of) doubtful accounts	1,005			(660		)
Distributions received from Unconsolidated Real Estate Affiliates	15,704			11,172
Depreciation	127,226			222,952
Amortization	8,372			10,029
Provisions for impairment	13,810			—
Amortization of deferred financing costs	—			55
Accretion of debt market rate adjustments	(19,322		)	(37,152		)
Amortization of intangibles other than in-place leases	16,590			26,294
Straight-line rent amortization	(11,928		)	(22,934		)
Net (gain) loss on disposition	(4,262		)	1,496
Decrease in restricted cash	10,223			340
Net changes:
Accounts and notes receivable	5,639			(142		)
Prepaid expenses, deferred expenses and other assets	(16,510		)	(4,181		)
Accounts payable and accrued expenses	(8,140		)	38,515
Net cash provided by operating activities	88,528			181,136
Cash flows from investing activities:
Development of real estate and property additions/improvements	(54,200		)	(75,370		)
Proceeds from sales of investment properties	43,270			131,859
Distributions received from Unconsolidated Real Estate Affiliates in excess of income	23,291			37,483
Increase in investments in Unconsolidated Real Estate Affiliates	(14,400		)	(18,503		)
Decrease in restricted cash	2,580			3,681
Other, net	90			82
Net cash provided by investing activities	631			79,232
Cash flows from financing activities:
Proceeds from issuance of mortgages, notes and loans payable	72,336			141,738
Principal payments on mortgages, notes and loans payable	(541,440		)	(391,139		)
Advances from (to) General Growth Properties, Inc.	82,561			(524,548		)
Distributions to noncontrolling interests	(7		)	(145		)
Prepayment of financing fees	(12		)	—
Deferred financing costs	—			(6,864		)
Net cash used in financing activities	(386,562		)	(780,958		)
Net change in cash and cash equivalents	(297,403		)	(520,590		)
Cash and cash equivalents at beginning of period	442,559			903,630
Cash and cash equivalents at end of period	$	145,156		$	383,040

T-6

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(UNAUDITED)

	Nine Months Ended September 30,
	2012			2011
	(Dollars in thousands)
Supplemental disclosure of cash flow information:
Interest paid	$	187,960		$	206,395
Interest capitalized	192			607
Income taxes paid	—			935
Reorganization items paid	—			3,089
Non-Cash Transactions:
Change in accrued capital expenditures incurred in accounts payable and accrued expenses	$	(2,980	)	1,053
Non-Cash Distribution to GGPLP:
Assets	$	2,420,198		—
Liabilities	(935,086		)	—

T-7

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Transactions with Affiliates
Percentage of revenue earned from joint venture			100.00%
Management fees from affiliates	$ 17,565	$ 14,177	$ 54,445	$ 43,363
Management fee expense at our share	(5,370)	(5,441)	(17,037)	(16,171)
Net management fees from affiliates	12,195	8,736	37,408	27,192
Significant Unobservable Inputs (Level 3) | Minimum
Fair Value Inputs [Abstract]
Discount rates			9.00%
Terminal capitalization rates			9.00%
Significant Unobservable Inputs (Level 3) | Maximum
Fair Value Inputs [Abstract]
Discount rates			10.00%
Terminal capitalization rates			10.00%
Fair Value Measurements, Non-recurring | Total Fair Value Measurement
Investment in real estate:
Total investments in real estate	238,362		238,362
Fair Value Measurements, Non-recurring | Significant Other Observable Inputs (Level 2)
Investment in real estate:
Total investments in real estate	137,656		137,656
Total (Loss) Gain	(52,048)		(72,348)
Fair Value Measurements, Non-recurring | Significant Unobservable Inputs (Level 3)
Investment in real estate:
Total investments in real estate	100,706		100,706
Total (Loss) Gain	$ (46,240)		$ (46,240)

XML

EARNINGS PER SHARE (Details 2) (Warrant)	3 Months Ended	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2012
Warrant
Antidilutive securities excluded from computation of earnings per share
Antidilutive securities excluded from diluted EPS (in shares)	65,689,708	58,781,182

XML

MORTGAGES, NOTES AND LOANS PAYABLE (Details) (USD $)	9 Months Ended		9 Months Ended	12 Months Ended					9 Months Ended		0 Months Ended					9 Months Ended			0 Months Ended		0 Months Ended			0 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2012 GGP Capital Trust I	Dec. 31, 2006 GGP Capital Trust I	Sep. 30, 2012 Collateralized mortgages, notes and loans payable	Dec. 31, 2011 Collateralized mortgages, notes and loans payable	Sep. 30, 2012 Corporate and other unsecured term loans	Dec. 31, 2011 Corporate and other unsecured term loans	Sep. 30, 2012 Junior Subordinated Notes due 2041	Dec. 31, 2011 Junior Subordinated Notes due 2041	Sep. 17, 2012 Bonds payable	Sep. 30, 2012 Bonds payable	Dec. 31, 2011 Bonds payable	Sep. 30, 2012 Bonds payable Minimum	Sep. 30, 2012 Bonds payable Maximum	Sep. 30, 2012 Revolving credit facility, (the "Facility")	Apr. 30, 2012 Revolving credit facility, (the "Facility")	Sep. 30, 2012 Note payable maturing in 2015	Jun. 06, 2012 2019 Term Loan The Grand Canal Shoppes and The Shoppes at The Palazzo	Jun. 06, 2012 2014 Term Loan The Grand Canal Shoppes	Jun. 06, 2012 2017 Term Loan The Shoppes at the Palazzo	Apr. 02, 2012 2022 Term Loan Ala Moana Center	Apr. 02, 2012 2018 Term Loan Ala Moana Center	Aug. 03, 2012 Collateralized loans mature between January 2019 and September 2024 property	Aug. 03, 2012 7.5% Collateralized loans
Mortgages, notes and loans payable
Fixed-rate debt	$ 14,246,457,000	$ 14,795,370,000			$ 12,909,868,000	$ 13,091,080,000	$ 1,336,589,000	$ 1,704,290,000												$ 368,100,000		$ 1,400,000,000	$ 1,290,000,000
Fixed-rate debt																			625,000,000
Variable-rate debt	1,827,558,000	2,347,644,000			1,827,558,000	2,347,644,000															239,000,000
Total mortgages, notes and loans payable	16,074,015,000	17,143,014,000
Weighted-average interest rate (as a percent)					4.81%	5.13%	5.98%	6.18%																5.80%	7.50%
Land, buildings and equipment and developments in progress (before accumulated depreciation) pledged as collateral					21,580,000,000
Secured debt, cross-collateralized with other properties					2,130,000,000																			763,500,000
Long-term debt					14,740,000,000				206,200,000	206,200,000		1,300,000,000	1,650,000,000
Amount repaid											349,500,000
Amount of recourse eliminated by refinancing																			238,700,000
Amount of recourse fixed and variable rate debt					1,560,000,000
Cash proceeds in excess of in-place financing																			18,700,000			110,000,000
Interest rate (as a percent)														5.38%	6.75%			4.41%	4.24%	4.78%		4.23%	5.59%
Issuance of trust preferred securities				200,000,000
Common securities issued to GGLP				6,200,000
Purchase of Junior Subordinated Notes				206,200,000
Maximum borrowing capacity																	1,000,000,000
Variable rate basis	LIBOR		LIBOR						LIBOR							LIBOR					LIBOR
Basis spread on variable rate (as a percent)									1.45%							2.25%					3.00%
Number of properties unencumbered																								2
Number of properties subject to collateralized debt																								5
Note payable																		20,800,000
Trust Preferred Securities, basis spread on variable rate			1.45%
Outstanding letter of credit and surety bonds	19,600,000	19,100,000
Market rate adjustment excluded from corporate and other unsecured loans							$ 15,200,000

XML

STOCK-BASED COMPENSATION PLANS (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
STOCK-BASED COMPENSATION PLANS
Stock-based compensation expense	$ 4,679	$ 5,083	$ 14,323	$ 14,769
Shares
Exercised (in shares)			(396,064)	(97,987)
Stock options
Shares
Stock options Outstanding at the beginning of the period (in shares)			11,503,869	5,427,011
Granted (in shares)				8,262,716
Exercised (in shares)			(386,029)	(51,988)
Forfeited (in shares)			(351,856)	(1,054,479)
Expired (in shares)			(499,088)	(927,078)
Stock options Outstanding at the end of the period (in shares)	10,266,896	11,656,182	10,266,896	11,656,182
Weighted Average Exercise Price
Stock options Outstanding at the beginning of the period (in dollars per share)			$ 15.65	$ 20.21
Granted (in dollars per share)				$ 15.31
Exercised (in dollars per share)			$ 13.56	$ 11.05
Forfeited (in dollars per share)			$ 14.65	$ 14.78
Expired (in dollars per share)			$ 46.39	$ 39.31
Stock options Outstanding at the end of the period (in dollars per share)	$ 13.64	$ 15.68	$ 13.64	$ 15.68
Stock options | Property management and other costs
STOCK-BASED COMPENSATION PLANS
Stock-based compensation expense	732	518	2,402	1,710
Stock options | General and administrative
STOCK-BASED COMPENSATION PLANS
Stock-based compensation expense	1,593	1,594	4,704	3,861
Restricted Stock | Property management and other costs
STOCK-BASED COMPENSATION PLANS
Stock-based compensation expense	372	707	1,269	2,662
Restricted Stock | General and administrative
STOCK-BASED COMPENSATION PLANS
Stock-based compensation expense	$ 1,982	$ 2,264	$ 5,948	$ 6,536

XML

UNCONSOLIDATED REAL ESTATE AFFILIATES (Details 2) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011	Dec. 31, 2010
Assets:
Land	$ 4,303,329	$ 4,623,944
Buildings and equipment	18,847,928	19,837,750
Less accumulated depreciation	(1,286,753)	(974,185)
Construction in progress	383,977	135,807
Net property and equipment	22,248,481	23,623,316
Net investment in real estate	24,965,560	26,676,289
Cash and cash equivalents	637,946	572,872	492,689	1,021,311
Accounts and notes receivable, net	243,503	218,749
Deferred expenses, net	176,377	170,012	151,426
Prepaid expenses and other assets	1,398,494	1,805,535
Total assets	27,421,880	29,518,151
Liabilities and Owner's Equity:
Owners' equity	7,772,125	8,579,345	9,464,094	10,181,749
Total liabilities and equity	27,421,880	29,518,151
Investment In and Loans To/From Unconsolidated Real Estate Affiliates, Net:
Owners' equity	7,772,125	8,579,345	9,464,094	10,181,749
Investment in and loans to/from Unconsolidated Real Estate Affiliates, Net	2,717,079	3,052,973
Unconsolidated
Assets:
Land	956,214	953,603
Buildings and equipment	7,608,675	7,906,346
Less accumulated depreciation	(2,027,208)	(1,950,860)
Construction in progress	152,659	99,352
Net property and equipment	6,690,340	7,008,441
Investment in unconsolidated joint ventures	1,104,360	758,372
Net investment in real estate	7,794,700	7,766,813
Cash and cash equivalents	267,468	387,549
Accounts and notes receivable, net	157,618	162,822
Deferred expenses, net	297,516	250,865
Prepaid expenses and other assets	163,110	143,021
Total assets	8,680,412	8,711,070
Liabilities and Owner's Equity:
Mortgages, notes and loans payable	6,259,558	5,790,509
Accounts payable, accrued expenses and other liabilities	433,871	446,462
Owners' equity	1,986,983	2,474,099
Total liabilities and equity	8,680,412	8,711,070
Investment In and Loans To/From Unconsolidated Real Estate Affiliates, Net:
Owners' equity	1,986,983	2,474,099
Less joint venture partners' equity	(1,142,358)	(1,417,682)
Capital or basis differences	1,872,454	1,996,556
Investment in and loans to/from Unconsolidated Real Estate Affiliates, Net	$ 2,717,079	$ 3,052,973

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STOCK-BASED COMPENSATION PLANS (Tables)

9 Months Ended

Sep. 30, 2012

STOCK-BASED COMPENSATION PLANS

Summary of compensation expense related to stock-based compensation plans

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Stock options - Property management and other costs	$	732	$	518	$	2,402	$	1,710
Stock options - General and administrative	1,593		1,594		4,704		3,861
Restricted stock - Property management and other costs	372		707		1,269		2,662
Restricted stock - General and administrative	1,982		2,264		5,948		6,536
Total	$	4,679	$	5,083	$	14,323	$	14,769

Summary of stock option activity

	2012				2011
			Weighted				Weighted
			Average				Average
			Exercise				Exercise
	Shares		Price		Shares		Price
Stock options Outstanding at January 1,	11,503,869		$	15.65	5,427,011		$	20.21
Granted	—		—		8,262,716		15.31
Exercised	(386,029	)	13.56		(51,988	)	11.05
Forfeited	(351,856	)	14.65		(1,054,479	)	14.78
Expired	(499,088	)	46.39		(927,078	)	39.31
Stock options Outstanding at September 30,	10,266,896		$	13.64	11,656,182		$	15.68

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ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Accounts payable and accrued expenses
Accrued interest	$ 208,008	$ 196,536
Accounts payable and accrued expenses	139,523	164,139
Accrued real estate taxes	95,466	77,722
Deferred gains/income	78,612	65,174
Accrued payroll and other employee liabilities	70,045	77,231
Construction payable	59,094	69,291
Tenant and other deposits	22,937	19,336
Insurance reserve liability	15,866	17,796
Capital lease obligation	12,605	12,774
Conditional asset retirement obligation liability	12,345	16,596
Uncertain tax position liability	5,873	6,847
Other	17,361	64,523
Total accounts payable and accrued expenses	1,271,364	1,445,738
Below-market tenant leases net
OTHER LIABILITIES
Net carrying amount	512,285	634,802
Above-market office lessee leases net
OTHER LIABILITIES
Net carrying amount	12,299	13,571
Above-market ground leases net
OTHER LIABILITIES
Net carrying amount	$ 9,045	$ 9,400

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2012

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Schedule of management fees earned

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Management fees from affiliates	$	17,565		$	14,177		$	54,445		$	43,363
Management fee expense	(5,370		)	(5,441		)	(17,037		)	(16,171		)
Net management fees from affiliates	$	12,195		$	8,736		$	37,408		$	27,192

Summary of assets that are measured at fair value on a nonrecurring basis

			Quoted Prices in
			Active Markets		Significant Other		Significant
	Total Fair Value		for Identical Assets		Observable Inputs		Unobservable Inputs
	Measurement		(Level 1)		(Level 2)		(Level 3)
Balance at September 30, 2012
Investments in real estate (1)	$	238,362	$	—	$	137,656	$	100,706

(1) Refer to the impairment section above for more information regarding impairment.

Summary of losses recorded in our Consolidated Statements of Operations and Comprehensive Income (Loss) as a result of changes in fair value to our investments in real estate

	Provisions for Impairment
	Three Months Ended September 30, 2012			Nine Months Ended September 30, 2012
Investments in real estate (1) (2)
Significant Other Observable Inputs (Level 2)	$	(52,048	)	$	(72,348	)
Significant Unobservable Inputs (Level 3)	(46,240		)	(46,240		)

(1) Refer to the impairment section above for more information regarding impairment.

(2) Certain of the properties impaired during the year have been subsequently sold.  As such, these impairment charges are included in discontinued operations in our Consolidated Statements of Operations and Comprehensive Income (Loss).

Schedule of quantitative information about the unobservable inputs of Level 3 real estate

Unobservable Quantitative Input	Range
Discount rates	9.0% to 10.0%
Terminal capitalization rates	9.0% to 10.0%

Schedule of components of debt eligible for Fair Value option and similar items not eligible for Fair Value option

	September 30, 2012				December 31, 2011
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Fixed-rate debt	$	14,246,457	$	15,338,267	$	14,795,370	$	14,978,908
Variable-rate debt	1,827,558		1,724,031		2,347,644		2,326,533
	$	16,074,015	$	17,062,298	$	17,143,014	$	17,305,441

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WARRANT LIABILITY (Details) (USD $)	3 Months Ended								3 Months Ended		12 Months Ended						12 Months Ended
	Sep. 30, 2012 warrant	Jul. 16, 2012 warrant	Apr. 16, 2012 warrant	Dec. 30, 2011 warrant	Jul. 15, 2011 warrant	Apr. 15, 2011 warrant	Sep. 30, 2012 The Brookfield Investor warrant	Sep. 30, 2012 Blackstone. warrant	Sep. 30, 2012 Fairholme warrant	Sep. 30, 2012 Pershing Square warrant	Dec. 31, 2011 The Brookfield Investor and Blackstone	Jul. 16, 2012 The Brookfield Investor and Blackstone	Apr. 16, 2012 The Brookfield Investor and Blackstone	Dec. 30, 2011 The Brookfield Investor and Blackstone	Jul. 15, 2011 The Brookfield Investor and Blackstone	Apr. 15, 2011 The Brookfield Investor and Blackstone	Dec. 31, 2011 Fairholme, Pershing Square and Blackstone	Jul. 16, 2012 Fairholme, Pershing Square and Blackstone	Apr. 16, 2012 Fairholme, Pershing Square and Blackstone	Dec. 30, 2011 Fairholme, Pershing Square and Blackstone	Jul. 15, 2011 Fairholme, Pershing Square and Blackstone	Apr. 15, 2011 Fairholme, Pershing Square and Blackstone
WARRANT LIABILITY
Number of Warrants							57,500,000	2,500,000
Number of Warrants								2,500,000	41,070,000	16,430,000
Exercise price (in dollars per share)							$ 10.75	$ 10.75	$ 10.50	$ 10.50		$ 9.69	$ 9.75	$ 9.79	$ 10.34	$ 10.41		$ 9.47	$ 9.52	$ 9.56	$ 10.10	$ 10.16
Exercise price (in dollars per share)								$ 10.50
Issuable Shares	120,000,000	133,116,000	132,372,000	131,748,000	124,704,000	123,960,000
Adjustments to exercise price											$ 0.3943						$ 0.3852
Term of Warrants, in number of years from the effective date	7 years
Initial period of term of Warrants in number of years during which prior notice is to be given									6 years 6 months	6 years 6 months
Notice period to exercise permanent warrants									90 days	90 days

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ACQUISITIONS AND INTANGIBLES (Details) (USD $)	9 Months Ended	0 Months Ended
	Sep. 30, 2012 box	Apr. 05, 2012 The Oaks and Westroads	Apr. 17, 2012 Sears Anchor Pads item
ACQUISITIONS AND INTANGIBLES
Number of anchor boxes acquired	5
Aggregate purchase price of anchor boxes acquired	$ 26,300,000
Number of anchor pads acquired			11
Number of anchor pads in which fee interest acquired			5
Number of anchor pads in which long-term leasehold interests acquired			6
Purchase price of anchor pads acquired			270,000,000
Purchase price of leasehold interest			212,000,000
Purchase price of fee interest			58,000,000
Ownership interest acquired (as a percent)		49.00%
Remaining debt assumed		49.00%
Investment in joint venture		191,100,000
Additional debt assumed		92,800,000
Total fair value of net assets acquired		200,271,000
Previous investment in The Oaks and Westroads		(83,415,000)
Cash paid to acquire our joint venture partner's interest		(98,309,000)
Gain from change in control of investment properties		18,547,000
Fair values of the assets acquired and liabilities assumed
Investment in real estate		402,197,000
Above-market lease intangibles		15,746,000
Below-market lease intangibles		(29,393,000)
Fair value of mortgages, notes and loans payable		(197,927,000)
Net working capital		9,648,000
Net assets acquired		$ 200,271,000

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ORGANIZATION (Details)	9 Months Ended
	Sep. 30, 2012
ORGANIZATION
Common equity ownership in GGP Limited Partnership (as a percent)	99.00%
Ownership in GGP Limited held by limited partners (as a percent)	1.00%

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EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS (Details) (USD $)	1 Months Ended			3 Months Ended		9 Months Ended			1 Months Ended	9 Months Ended
	Aug. 31, 2012	May 31, 2012	Feb. 29, 2012	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011	Dec. 31, 2011 RPI	Sep. 30, 2012 Series B	Sep. 30, 2012 Series D	Sep. 30, 2012 Series E	Sep. 30, 2012 Series C
Allocation to Noncontrolling Interests
Distributions to preferred Operating Partnership units				$ (2,335,000)	$ (2,336,000)	$ (10,104,000)	$ (6,932,000)
Net loss allocation to noncontrolling interests in operatingpartnership from continuing operations (common units)				1,603,000	(1,810,000)	3,753,000	(386,000)
Net income (loss) allocated to noncontrolling interest in consolidated real estate affiliates				(547,000)	(365,000)	115,000	600,000
Allocation to noncontrolling interests				(1,279,000)	(4,511,000)	(6,236,000)	(6,718,000)
Other comprehensive loss (income) allocation to common units				(5,000)	612,000	233,000	302,000
Comprehensive loss allocated to noncontrolling interests				(1,284,000)	(3,899,000)	(6,003,000)	(6,416,000)
Conversion rate of common stock (in dollars per share)				$ 1.0397624		$ 1.0397624		$ 1.0397624
Estimated payments for repurchase of redeemable noncontrolling interest				132,000,000		132,000,000
Conversion ratio for convertible common units to common stock						1
Unit Conversions Disclosures
Number of Common Units for each Preferred unit										3.000	1.508	1.298	1.000
Number of Contractual Convertible Preferred Units Outstanding										1,279,715	532,750	502,658	20,000
Converted Basis to Common Units Outstanding										3,991,799	803,494	652,651	20,000
Conversion Price (in dollars per share)										$ 16.66670	$ 33.15188	$ 38.51000	$ 250.00000
Redemption Value				134,531,175		134,531,175				77,760,248	26,637,337	25,133,590	5,000,000
GGP stock price per share				$ 19.48		$ 19.48		$ 15.02		$ 19.48
Activity of redeemable noncontrolling interests
Balance at the beginning of the period						223,795,000	232,364,000
Net lncome						(3,753,000)	386,000
Distributions						(2,116,000)	(2,056,000)
Cash redemption of operating partnership units						(1,134,000)	(4,615,000)
Dividend for RPI Spin Off						3,137,000
Other comprehensive loss						(233,000)	(302,000)
Adjustment for noncontrolling interest in operating partnership						46,855,000	(12,984,000)
Balance at the end of the period				266,551,000	212,793,000	266,551,000	212,793,000
Common Stock Dividend and Purchase of Common Stock
Dividends declared per share (in dollars per share)	$ 0.11	$ 0.10	$ 0.10	$ 0.11	$ 0.10	$ 0.31	$ 0.30
Number of shares to be received by entity's shareholders as a result of spin-off									0.0375
Distribution payable and decrease in retained earnings (accumulated deficit)				106,312,000		106,312,000		526,332,000
Distribution payable and decrease in retained earnings (accumulated deficit) related to special dividend								426,700,000
Adjustment to retained earnings (accumulated deficit)						$ 26,000,000
Number of shares issued due to DRIP elections for dividends declared						2,866,019	4,846,784

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UNCONSOLIDATED REAL ESTATE AFFILIATES (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Revenues:
Minimum rents	$ 401,259	$ 383,541	$ 1,175,365	$ 1,158,479
Tenant recoveries	184,869	189,942	542,784	547,157
Overage rents	12,835	12,823	34,230	29,291
Management and other fees	17,823	14,188	55,646	43,775
Other	16,387	16,488	49,802	47,357
Total revenues	633,173	616,982	1,857,827	1,826,059
Expenses:
Real estate taxes	59,258	56,530	174,797	173,898
Property maintenance costs	18,758	21,419	62,102	71,128
Marketing	8,085	7,639	22,497	19,937
Other property operating costs	101,890	107,631	286,170	290,629
Provision for doubtful accounts	1,370	1,078	3,097	2,295
Property management and other costs	38,903	45,455	119,350	137,517
General and administrative	10,045	15,441	31,675	18,067
Depreciation and amortization	208,833	226,360	612,188	675,536
Total expenses	545,430	481,553	1,410,164	1,389,007
Operating income	87,743	135,429	447,663	437,052
Interest income	766	680	2,307	1,912
Interest expense	(204,917)	(218,932)	(607,915)	(672,936)
Provision for income taxes	(2,449)	(3,954)	(5,553)	(7,882)
Income (loss) from continuing operations	(220,184)	260,837	(518,183)	75,072
Discontinued operations	13,576	(4,276)	10,982	(13,688)
Allocation to noncontrolling interests	(1,279)	(4,511)	(6,236)	(6,718)
Net (loss) income attributable to common stockholders	(207,887)	252,050	(513,437)	54,666
Equity In (Loss) Income of Unconsolidated Real Estate Affiliates:
Net income attributable to the venture	(207,887)	252,050	(513,437)	54,666
Equity in income of Unconsolidated Real Estate Affiliates	22,054	9,833	39,849	(2,534)
Unconsolidated Real Estate Affiliates
Revenues:
Minimum rents	188,299	174,587	573,276	528,495
Tenant recoveries	74,767	72,571	225,059	219,604
Overage rents	5,788	4,766	16,743	12,024
Management and other fees	4,945	3,657	17,087	12,431
Other	7,659	26,381	40,046	40,831
Total revenues	281,458	281,962	872,211	813,385
Expenses:
Real estate taxes	23,927	21,885	71,858	67,728
Property maintenance costs	8,838	9,219	27,652	29,296
Marketing	4,080	4,214	10,894	10,628
Other property operating costs	42,232	43,524	120,561	122,234
Provision for doubtful accounts	943	2,573	1,711	6,422
Property management and other costs	11,388	11,411	36,113	33,956
General and administrative	5,447	5,007	25,544	19,271
Depreciation and amortization	65,189	64,973	203,976	196,227
Total expenses	162,044	162,806	498,309	485,762
Operating income	119,414	119,156	373,902	327,623
Interest income	2,400	5,005	8,114	15,339
Interest expense	(85,121)	(90,858)	(253,938)	(265,770)
Provision for income taxes	(221)	(213)	(672)	(585)
Equity in income of unconsolidated joint ventures	15,309	20,820	33,222	39,055
Income (loss) from continuing operations	51,781	53,910	160,628	115,662
Discontinued operations	398	(784)	(543)	111,399
Allocation to noncontrolling interests	(535)	(459)	(1,267)	(3,435)
Net (loss) income attributable to common stockholders	51,644	52,667	158,818	223,626
Equity In (Loss) Income of Unconsolidated Real Estate Affiliates:
Net income attributable to the venture	51,644	52,667	158,818	223,626
Joint venture partners' share of income	(30,050)	(32,352)	(95,005)	(123,495)
Amortization of capital or basis differences	460	(10,482)	(23,964)	(102,665)
Equity in income of Unconsolidated Real Estate Affiliates	$ 22,054	$ 9,833	$ 39,849	$ (2,534)

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2012

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and 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 noncontrolling partner’s share of the assets, liabilities and operations of the joint ventures (generally computed as the joint venture partner’s ownership percentage) is included in noncontrolling interests in Consolidated Real Estate Affiliates as permanent equity of the Company. All significant intercompany balances and transactions have been eliminated.

We operate in a single reportable segment referred to as our retail and other segment, which includes the operation, development and management of retail and other rental properties, primarily regional malls.  Our portfolio of regional malls represents a collection of retail properties that are targeted to a range of market sizes and consumer tastes.  Each of our operating properties is considered a separate operating segment, as each property earns revenues and incurs expenses, individual operating results are reviewed and discrete financial information is available.  We do not distinguish or group our consolidated operations based on geography, size or type. Further, all material operations are within the United States and no customer or tenant comprises more than 10% of consolidated revenues.  As a result, the Company’s operating properties are aggregated into a single reportable segment.

The accompanying unaudited consolidated financial statements and related notes have been prepared in accordance with GAAP and in conformity with the rules and regulations of the SEC applicable to interim financial information. As such, certain information and footnote disclosures normally included in complete annual financial statements prepared in accordance with GAAP have been omitted in accordance with the rules and regulations of the SEC.

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 September 30, 2012 are not necessarily indicative of the results to be obtained for the full fiscal year.

Reclassifications

Certain prior period amounts in the consolidated financial statements have been reclassified to conform to the current period presentation as amounts included on the Consolidated Statements of Operations and Comprehensive Income (Loss) for properties sold have been reclassified to discontinued operations for all periods presented.

In addition, three properties previously classified as held for sale were reclassified as held for use in the first quarter of 2012.  These properties are presented within continuing operations for all periods presented in the accompanying consolidated financial statements (Note 4).

In addition, prior period disclosures related to the Consolidated Statements of Operations and Comprehensive Income (Loss) in the accompanying footnotes have been adjusted for the impacts of discontinued operations.

Transactions with Affiliates

Management fees and other corporate 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 are reported at 100% of the revenue earned from the joint venture in management fees and other corporate revenues on our Consolidated Statements of Operations and Comprehensive Income (Loss).  Our share of the management fee expense incurred by the Unconsolidated Real Estate Affiliates is reported within equity in income of Unconsolidated Real Estate Affiliates on our Consolidated Statements of Operations and Comprehensive Income (Loss) and in property management and other costs in the Condensed Combined Statements of Income in Note 5.  The following table summarizes the management fees from affiliates and our share of the management fee expense:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Management fees from affiliates	$	17,565		$	14,177		$	54,445		$	43,363
Management fee expense	(5,370		)	(5,441		)	(17,037		)	(16,171		)
Net management fees from affiliates	$	12,195		$	8,736		$	37,408		$	27,192

In connection with the spin-off of Rouse Properties, Inc. (“RPI Spin-Off”), we have entered into a Transition Services Agreement (“TSA”) with RPI.  In accordance with the TSA, we have agreed to provide legal and other services to RPI for established fees, which were not material for the three and nine months ended September 30, 2012.

Acquisitions of Operating Properties

Acquisitions of properties are accounted for utilizing the acquisition method of accounting and, accordingly, the results of operations of acquired properties were included in the results of operations from the respective dates of acquisition.  Estimates of future cash flows and other valuation techniques are used to allocate the purchase price of acquired property between land, buildings and improvements, equipment, debt liabilities assumed and identifiable intangible assets and liabilities such as amounts related to in-place tenant leases, acquired above and below-market tenant and ground leases and tenant relationships. No significant value had been ascribed to the tenant relationships (Note 3).

Impairment

Operating properties

Accounting for the impairment of long-lived assets requires that if impairment indicators exist and the undiscounted cash flows expected to be generated by an asset are less than its carrying amount, an impairment provision should be recorded to write down the carrying amount of such asset to its fair value.  We review our consolidated properties for potential impairment indicators whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

Impairment indicators are assessed separately for each property and include, but are not limited to, significant decreases in real estate property net operating income, significant decreases in occupancy percentage, debt maturities, management’s intent with respect to the properties and prevailing market conditions.

Impairment indicators for pre-development costs, which are typically costs incurred during the beginning stages of a potential development and construction in progress, are assessed by project and include, but are not limited to, significant changes in the Company’s plans with respect to the project, significant changes in projected completion dates, tenant demand, anticipated revenues or cash flows, development costs, market factors and sustainability of development projects.

If an indicator of potential impairment exists, the property is tested for recoverability by comparing its carrying amount to the estimated future undiscounted cash flows.  The cash flow estimates used both for determining recoverability and estimating fair value are inherently judgmental and reflect current and projected trends in rental, occupancy and capitalization rates, and estimated holding periods for the applicable properties.  Although the carrying amount may exceed the estimated fair value of certain properties, a real estate asset is only considered to be impaired when its carrying amount cannot be recovered through estimated future undiscounted cash flows.  To the extent an impairment provision is determined to be necessary, the excess of the carrying amount of the property over its estimated fair value is expensed to operations.  In addition, the impairment provision is allocated proportionately to adjust the carrying amount of the asset group.  The adjusted carrying amount, which represents the new cost basis of the property, is depreciated over the remaining useful life of the property.

Although we may market a property for sale, there can be no assurance that the transaction will be complete until the sale is finalized.  However, GAAP requires us to reduce the recoverability periods for these assets.  If we cannot recover the carrying value of these properties within the planned hold period, we will estimate the fair values of the assets and record impairment charges for properties in which the estimated fair value is less than their carrying value.

We recorded impairment charges of $118.6 million on nine of our operating properties during the nine months ended September 30, 2012.  Of these impairment charges, $98.3 million related to seven of our operating properties and were recorded during the three months ended September 30, 2012.  These impairment charges are included in provision for impairment in our Consolidated Statements of Operations and Comprehensive Income (Loss).

During the three months ended September 30, 2012, three of the impairment charges related to regional malls that were transferred to the special servicer.  One of the properties was sold, in a lender directed sale in full satisfaction of the related debt, subsequent to September 30, 2012, for an amount less than the carrying value (Note 16).  Accordingly, we recorded an impairment charge of $11.1 million, resulting in a net book value of $15.2 million, which is less than the carrying value of the non-recourse debt of $64.9 million.  We expect to record a gain on extinguishment of debt of approximately $50 million in the fourth quarter of 2012.  We recorded impairment charges on the other two properties of $46.2 million, resulting in an aggregate net book value of $100.7 million, which is less than the aggregate carrying value of the non-recourse debt of $166.1 million.  These impairment charges were recorded because the estimated fair values of the properties, based on discounted cash flow analyses, were less than the carrying values of the properties.

The remaining four impairment charges recorded during the three months ended September 30, 2012, totaled $41.0 million and related to two regional malls and two small office buildings.  These impairment charges were recorded because the estimated sales prices of these properties were lower than their carrying values.  The estimated sales prices were based on negotiated sales prices finalized in the third quarter of 2012.

During the nine months ended September 30, 2012, we previously recorded two impairment charges that totaled $20.3 million and related to two regional malls as the sales prices of these properties were lower than their carrying values.  These properties were sold in the period in which the impairment was taken.  These impairment charges are included, net of the gain on forgiveness of debt of $9.9 million, in discontinued operations in our Consolidated Statements of Operations and Comprehensive Income (Loss).

Gains on disposition, including settlement of debt, are recorded in the Consolidated Statements of Operations and Comprehensive Income (Loss) in the period the property is disposed.  Impairment charges are recorded in the Consolidated Statements of Operations and Comprehensive Income (Loss) when the carrying value exceeds the estimated fair value of the property, which can occur in accounting periods preceding disposition and / or in the period of disposition.

No provisions for impairment were necessary for the three or nine months ended September 30, 2011.

Investment in Unconsolidated Real Estate Affiliates

According to the guidance related to the equity method of accounting for investments, a series of operating losses of an investee or other factors may indicate that an other-than-temporary decrease in value of our investment in the Unconsolidated Real Estate Affiliates has occurred. The investment in each of the Unconsolidated Real Estate Affiliates is evaluated periodically and as deemed necessary for valuation declines below the carrying amount. Accordingly, in addition to the property-specific impairment analysis that we perform for such joint ventures (as part of our operating property impairment process described above), we also considered whether there were other-than-temporary impairments with respect to the carrying values of our Unconsolidated Real Estate Affiliates.

We did not record any provisions for impairment related to our investments in Unconsolidated Real Estate Affiliates for the three and nine months ended September 30, 2012 and 2011.

General

Impairment charges could be taken in the future if economic conditions change or if the plans regarding our assets change.  Therefore, we can provide no assurance that material impairment charges with respect to our assets, including operating properties, construction in progress and investments in Unconsolidated Real Estate Affiliates, will not occur in future periods.  Accordingly, we will continue to monitor circumstances and events in future periods to determine whether further impairments are warranted.

Fair Value Measurements

The accounting principles for fair value measurements establish a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.  These tiers include:

·Level 1 - defined as observable inputs such as quoted prices for identical assets or liabilities in active markets;

·Level 2 - defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and

·Level 3 - defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The impairment section above includes a discussion of properties measured at fair value on a non recurring basis using Level 2 and Level 3 inputs.  Fair value of financial instruments below includes a discussion of the fair value of debt, which is estimated using Level 2 and Level 3 inputs.   Note 8 includes a discussion of the warrant liability which is estimated on a recurring basis using Level 3 inputs.

Fair Value of Operating Properties

The following table summarizes our assets that are measured at fair value on a nonrecurring basis as of September 30, 2012.

			Quoted Prices in
			Active Markets		Significant Other		Significant
	Total Fair Value		for Identical Assets		Observable Inputs		Unobservable Inputs
	Measurement		(Level 1)		(Level 2)		(Level 3)
Balance at September 30, 2012
Investments in real estate (1)	$	238,362	$	—	$	137,656	$	100,706

(1) Refer to the impairment section above for more information regarding impairment.

We estimate fair value relating to impairment assessments based upon discounted cash flow and direct capitalization models that include all projected cash inflows and outflows over a specific holding period, or the negotiated sales price, if applicable.  Such projected cash flows are comprised of contractual rental revenues and forecasted rental revenues and expenses based upon market conditions and expectations for growth. Capitalization rates and discount rates utilized in these models are based on a reasonable range of current market rates for each property analyzed.  Based upon these inputs, we determined that our valuations of properties using a discounted cash flow or a direct capitalization model were classified within Level 3 of the fair value hierarchy.  For our properties for which the estimated fair value was based on negotiated sales prices, we determined that our valuation was classified within Level 2 of the fair value hierarchy.

The following table summarizes provisions for impairment recorded in our Consolidated Statements of Operations and Comprehensive Income (Loss) as a result of changes in the fair value of our investments in real estate:

	Provisions for Impairment
	Three Months Ended September 30, 2012			Nine Months Ended September 30, 2012
Investments in real estate (1) (2)
Significant Other Observable Inputs (Level 2)	$	(52,048	)	$	(72,348	)
Significant Unobservable Inputs (Level 3)	(46,240		)	(46,240		)

(1) Refer to the impairment section above for more information regarding impairment.

(2) Certain of the properties impaired during the year have been subsequently sold.  As such, these impairment charges are included in discontinued operations in our Consolidated Statements of Operations and Comprehensive Income (Loss).

The following table sets forth quantitative information about the unobservable inputs of our Level 3 real estate, which are recorded at fair value as of September 30, 2012:

Unobservable Quantitative Input	Range
Discount rates	9.0% to 10.0%
Terminal capitalization rates	9.0% to 10.0%

Fair Value of Financial Instruments

The fair values of our financial instruments approximate their carrying amount in our consolidated financial statements except for debt.  Management’s estimates of fair value are presented below for our debt as of September 30, 2012 and December 31, 2011.

	September 30, 2012				December 31, 2011
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Fixed-rate debt	$	14,246,457	$	15,338,267	$	14,795,370	$	14,978,908
Variable-rate debt	1,827,558		1,724,031		2,347,644		2,326,533
	$	16,074,015	$	17,062,298	$	17,143,014	$	17,305,441

The fair value of our Junior Subordinated Notes approximates their carrying amount as of September 30, 2012 and December 31, 2011.  We estimated the fair value of mortgages, notes and other loans payable using Level 2 and Level 3 inputs based on recent financing transactions, estimates of the fair value of the property that serves as collateral for such debt, historical risk premiums for loans of comparable quality, current London Interbank Offered Rate (“LIBOR”), U.S. treasury obligation interest rates and on the discounted estimated future cash payments to be made on such debt. The discount rates estimated reflect our judgment as to what the approximate current lending rates for loans or groups of loans with similar maturities and credit quality would be if credit markets were operating efficiently and assume that the debt is outstanding through maturity. We have utilized market information as available or present value techniques to estimate the amounts required to be disclosed.  Since such amounts are estimates that are based on limited available market information for similar transactions and do not acknowledge transfer or other repayment restrictions that may exist in specific loans, it is unlikely that the estimated fair value of any such debt could be realized by immediate settlement of the obligation.

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ACQUISITIONS AND INTANGIBLES (Details 2) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012 Tenant leases, In-place value	Dec. 31, 2011 Tenant leases, In-place value	Sep. 30, 2012 Tenant leases, Above-market	Dec. 31, 2011 Tenant leases, Above-market	Sep. 30, 2012 Tenant leases, Below-market	Dec. 31, 2011 Tenant leases, Below-market	Sep. 30, 2012 Building leases, Above-market	Dec. 31, 2011 Building leases, Above-market	Sep. 30, 2012 Ground leases, Above-market	Dec. 31, 2011 Ground leases, Above-market	Sep. 30, 2012 Ground leases, Below-market	Dec. 31, 2011 Ground leases, Below-market	Sep. 30, 2012 Real estate tax stabilization agreement	Dec. 31, 2011 Real estate tax stabilization agreement
Finite-lived intangible assets and liabilities
Gross Asset (Liability)					$ 1,005,505,000	$ 1,252,484,000	$ 1,244,135,000	$ 1,478,798,000	$ (740,840,000)	$ (819,056,000)	$ (15,268,000)	$ (15,268,000)	$ (9,756,000)	$ (9,839,000)	$ 196,824,000	$ 204,432,000	$ 111,506,000	$ 111,506,000
Accumulated (Amortization)/ Accretion					(394,853,000)	(391,605,000)	(378,625,000)	(315,044,000)	228,555,000	184,254,000	2,969,000	1,697,000	711,000	439,000	(8,678,000)	(6,202,000)	(11,945,000)	(7,211,000)
Net Carrying Amount					610,652,000	860,879,000	865,510,000	1,163,754,000	(512,285,000)	(634,802,000)	(12,299,000)	(13,571,000)	(9,045,000)	(9,400,000)	188,146,000	198,230,000	99,561,000	104,295,000
Amortization/accretion effect on continuing operations	(88,769,000)	(125,541,000)	(276,521,000)	(362,723,000)
Future amortization, including company's share of items from unconsolidated real estate affiliates
Estimated decrease in results from continuing operations due to amortization expense, remainder of 2012	74,400		74,400
Estimated decrease in results from continuing operations due to amortization expense, 2013	247,500		247,500
Estimated decrease in results from continuing operations due to amortization expense, 2014	199,900		199,900
Estimated decrease in results from continuing operations due to amortization expense, 2015	162,100		162,100
Estimated decrease in results from continuing operations due to amortization expense, 2016	$ 128,100		$ 128,100

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MORTGAGES, NOTES AND LOANS PAYABLE (Tables)

9 Months Ended

Sep. 30, 2012

MORTGAGES, NOTES AND LOANS PAYABLE

Summary of Mortgages, notes and loans payable

	September 30,		December 31,
	2012		2011
Fixed-rate debt:
Collateralized mortgages, notes and loans payable	$	12,909,868	$	13,091,080
Corporate and other unsecured term loans	1,336,589		1,704,290
Total fixed-rate debt	14,246,457		14,795,370
Variable-rate debt:
Collateralized mortgages, notes and loans payable	1,827,558		2,347,644
Total Mortgages, notes and loans payable	$	16,074,015	$	17,143,014
Variable-rate debt:
Junior Subordinated Notes	$	206,200	$	206,200

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UNCONSOLIDATED REAL ESTATE AFFILIATES (Tables)

9 Months Ended

Sep. 30, 2012

UNCONSOLIDATED REAL ESTATE AFFILIATES

Schedule of Condensed Combined Balance Sheets and Income Statements - Unconsolidated Real Estate Affiliates

	September 30,			December 31,
	2012			2011
Condensed Combined Balance Sheets - Unconsolidated Real Estate Affiliates
Assets:
Land	$	956,214		$	953,603
Buildings and equipment	7,608,675			7,906,346
Less accumulated depreciation	(2,027,208		)	(1,950,860		)
Construction in progress	152,659			99,352
Net property and equipment	6,690,340			7,008,441
Investments in unconsolidated joint ventures	1,104,360			758,372
Net investment in real estate	7,794,700			7,766,813
Cash and cash equivalents	267,468			387,549
Accounts and notes receivable, net	157,618			162,822
Deferred expenses, net	297,516			250,865
Prepaid expenses and other assets	163,110			143,021
Total assets	$	8,680,412		$	8,711,070
Liabilities and Owners’ Equity:
Mortgages, notes and loans payable	$	6,259,558		$	5,790,509
Accounts payable, accrued expenses and other liabilities	433,871			446,462
Owners’ equity	1,986,983			2,474,099
Total liabilities and owners’ equity	$	8,680,412		$	8,711,070
Investment In and Loans To/From Unconsolidated Real Estate Affiliates, Net:
Owners’ equity	$	1,986,983		$	2,474,099
Less joint venture partners’ equity	(1,142,358		)	(1,417,682		)
Capital or basis differences	1,872,454			1,996,556
Investment in and loans to/from
Unconsolidated Real Estate Affiliates, net	$	2,717,079		$	3,052,973

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Condensed Combined Statements of Income - Unconsolidated Real Estate Affiliates
Revenues:
Minimum rents	$	188,299		$	174,587		$	573,276		$	528,495
Tenant recoveries	74,767			72,571			225,059			219,604
Overage rents	5,788			4,766			16,743			12,024
Management and other fees	4,945			3,657			17,087			12,431
Other	7,659			26,381			40,046			40,831
Total revenues	281,458			281,962			872,211			813,385
Expenses:
Real estate taxes	23,927			21,885			71,858			67,728
Property maintenance costs	8,838			9,219			27,652			29,296
Marketing	4,080			4,214			10,894			10,628
Other property operating costs	42,232			43,524			120,561			122,234
Provision for doubtful accounts	943			2,573			1,711			6,422
Property management and other costs	11,388			11,411			36,113			33,956
General and administrative	5,447			5,007			25,544			19,271
Depreciation and amortization	65,189			64,973			203,976			196,227
Total expenses	162,044			162,806			498,309			485,762
Operating income	119,414			119,156			373,902			327,623
Interest income	2,400			5,005			8,114			15,339
Interest expense	(85,121		)	(90,858		)	(253,938		)	(265,770		)
Provision for income taxes	(221		)	(213		)	(672		)	(585		)
Equity in income of unconsolidated joint ventures	15,309			20,820			33,222			39,055
Income from continuing operations	51,781			53,910			160,628			115,662
Discontinued operations	398			(784		)	(543		)	111,399
Allocation to noncontrolling interests	(535		)	(459		)	(1,267		)	(3,435		)
Net income attributable to the ventures	$	51,644		$	52,667		$	158,818		$	223,626
Equity In Income (Loss) of Unconsolidated Real Estate Affiliates:
Net income attributable to the ventures	$	51,644		$	52,667		$	158,818		$	223,626
Joint venture partners’ share of income	(30,050		)	(32,352		)	(95,005		)	(123,495		)
Amortization of capital or basis differences	460			(10,482		)	(23,964		)	(102,665		)
Equity in income (loss) of Unconsolidated Real Estate Affiliates	$	22,054		$	9,833		$	39,849		$	(2,534	)

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PREPAID EXPENSES AND OTHER ASSETS (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
OTHER ASSETS.
Security and escrow deposits	$ 152,166	$ 247,718
Prepaid expenses	68,236	51,928
Other non-tenant receivables	7,697	21,198
Deferred tax, net of valuation allowances	529	4,578
Other	16,649	13,834
Total prepaid expenses and other assets	1,398,494	1,805,535
Above-market tenant leases net
OTHER ASSETS
Net carrying amount	865,510	1,163,754
Below-market ground leases net
OTHER ASSETS
Net carrying amount	188,146	198,230
Real estate tax stabilization agreement net
OTHER ASSETS
Net carrying amount	$ 99,561	$ 104,295

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DISPOSITIONS, DISCONTINUED OPERATIONS AND GAINS (LOSSES) ON DISPOSITIONS OF INTERESTS IN OPERATING PROPERTIES (Details) (USD $)	3 Months Ended			9 Months Ended		3 Months Ended				1 Months Ended			3 Months Ended		9 Months Ended
	Sep. 30, 2012	Mar. 31, 2012 property	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012 Office Portfolio item	Sep. 30, 2012 Regional Malls item	Sep. 30, 2012 Strip Centers item	Sep. 30, 2012 Office Building item	Mar. 31, 2012 One Regional Mall	Feb. 29, 2012 Grand Traverse Mall	Feb. 21, 2012 Grand Traverse Mall	Sep. 30, 2012 Discontinuing operations	Sep. 30, 2011 Discontinuing operations	Sep. 30, 2012 Discontinuing operations	Sep. 30, 2011 Discontinuing operations	Sep. 30, 2012 Discontinuing operations HHC Properties	Jan. 12, 2012 Discontinuing operations Rouse Properties, Inc. (Rouse) sqft property
DISPOSITIONS, DISCONTINUED OPERATIONS AND GAINS (LOSSES) ON DISPOSITIONS OF INTERESTS IN OPERATING PROPERTIES
Number of properties previously classified as held for sale, reclassified as held for use		4
Number of properties previously classified as held for sale, reclassified as held for use, continuing operations		3
Number of properties previously classified as held for sale, reclassified as held for use, discontinued operations		1
Discontinued operations
Number of properties sold						1	2	4	1
Sale Price	$ 216,600,000									$ 25,000,000
Cash received on sale	126,800,000			194,269,000	446,765,000					8,000,000
Gain on disposition of properties	13,200,000
Note receivable entered into with the buyer										17,000,000
Secured indebtedness											18,900,000
Secured indebtedness at market rate adjustment											9,000,000
Gain on extinguishment of debt				9,911,000							9,900,000
Debt on the property paid down with proceeds from sale	89,800,000			89,800,000								62,000,000					19,200,000
Number of mall portfolios spun-off in the form of a special dividend																		30
Area of mall portfolio spun-off in the form of a special dividend (in square feet)																		21,000,000
Entity's ownership in properties (as a percent)																		1.00%
Retail and other revenue													4,858,000	82,258,000	38,620,000	260,156,000
Retail and other operating expenses													3,933,000	69,023,000	23,440,000	206,264,000
Provisions for impairment	98,288,000			98,288,000											10,393,000	51,000
Total expenses	545,430,000		481,553,000	1,410,164,000	1,389,007,000								3,933,000	69,023,000	33,833,000	206,315,000
Operating income	87,743,000		135,429,000	447,663,000	437,052,000								925,000	13,235,000	4,787,000	53,841,000
Interest expense, net													(561,000)	(19,628,000)	(6,819,000)	(68,705,000)
Net income (loss) from operations													364,000	(6,393,000)	(2,032,000)	(14,864,000)
Provision for income taxes														(158,000)	(23,000)	(500,000)
Allocation to noncontrolling interests	(1,279,000)		(4,511,000)	(6,236,000)	(6,718,000)									(93,000)		(146,000)
Gain on dispositions													13,212,000	2,368,000	13,037,000	1,822,000
Net income (loss) from discontinued operations	$ 13,576,000		$ (4,276,000)	$ 10,982,000	$ (13,688,000)								$ 13,576,000	$ (4,276,000)	$ 10,982,000	$ (13,688,000)

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WARRANT LIABILITY (Tables)

9 Months Ended

Sep. 30, 2012

WARRANT LIABILITY

Schedule of Warrants received

		Initial
Warrant Holder	Number of Warrants	Exercise Price
Brookfield Investor	57,500,000	$	10.75
Blackstone - B	2,500,000	10.75
Fairholme	41,070,000	10.50
Pershing Square	16,430,000	10.50
Blackstone - A	2,500,000	10.50
	120,000,000

Schedule of shares issuable upon exercise of the outstanding GGP warrants

	Exercise Price
Record Date	Issuable Shares	Brookfield Investor and Blackstone - B		Fairholme, Pershing Square and Blackstone - A
April 15, 2011	123,960,000	$	10.41	$	10.16
July 15, 2011	124,704,000	10.34		10.10
December 30, 2011	131,748,000	9.79		9.56
April 16, 2012	132,372,000	9.75		9.52
July 16, 2012	133,116,000	9.69		9.47

Schedule of estimated fair value of Warrants and significant observable and unobservable inputs used in valuation

	September 30, 2012			December 31, 2011
Warrant liability	$	1,399,043		$	985,962
Observable Inputs
GGP stock price per share	$	19.48		$	15.02
Warrant term	5.11			5.86
Unobservable Inputs
Expected volatility	30		%	37		%
Range of values considered	(15% - 70		)%	(20% - 65		)%
Discount for lack of marketability	3		%	3		%
Range of values considered	(3% - 7		)%	(3% - 7		)%

Schedule of change in fair value of the Warrant liability

	2012		2011
Balance as of January 1,	$	985,962	$	1,041,004
Warrant liability adjustment	413,081		(319,460		)
Balance as of September 30,	$	1,399,043	$	721,544

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EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS (Tables)

9 Months Ended

Sep. 30, 2012

EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS

Schedule of activity included in the allocation to noncontrolling interests

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Distributions to preferred Operating Partnership units	$	(2,335	)	$	(2,336	)	$	(10,104	)	$	(6,932	)
Net loss allocation to noncontrolling interests in operating partnership from continuing operations (common units)	1,603			(1,810		)	3,753			(386		)
Net income (loss) allocated to noncontrolling interest in consolidated real estate affiliates	(547		)	(365		)	115			600
Allocation to noncontrolling interests	$	(1,279	)	$	(4,511	)	$	(6,236	)	$	(6,718	)
Other comprehensive loss (income) allocation to common units	(5		)	612			233			302
Comprehensive loss allocated to noncontrolling interests	$	(1,284	)	$	(3,899	)	$	(6,003	)	$	(6,416	)

Schedule of redeemable noncontrolling interests

	Number of Common Units for each Preferred Unit	Number of Contractual Convertible Preferred Units Outstanding as of September 30, 2012	Converted Basis to Common Units Outstanding as of September 30, 2012	Conversion Price		Redemption Value
Series B (1)	3.0000	1,279,715	3,991,799	$	16.66670	$	77,760,248
Series D	1.5082	532,750	803,494	33.15188		26,637,337
Series E	1.2984	502,658	652,651	38.51000		25,133,590
Series C	1.0000	20,000	20,000	250.00000		5,000,000
						$	134,531,175

(1)  The conversion price of Series B preferred units is lower than the GGP September 28, 2012 closing common stock price of $19.48.  Therefore, a common stock price of $19.48 is used to calculate the Series B redemption value.

Activity of redeemable noncontrolling interests

Balance at January 1, 2011	$	232,364
Net income	386
Distributions	(2,056		)
Cash redemption of operating partnership units	(4,615		)
Other comprehensive loss	(302		)
Adjustment for noncontrolling interests in Operating Partnership	(12,984		)
Balance at September 30, 2011	$	212,793
Balance at January 1, 2012	$	223,795
Net loss	(3,753		)
Distributions	(2,116		)
Cash redemption of operating partnership units	(1,134		)
Dividend for RPI Spin-off	3,137
Other comprehensive loss	(233		)
Adjustment for noncontrolling interests in Operating Partnership	46,855
Balance at September 30, 2012	$	266,551

Summary of common stock dividends declared

Declaration Date	Record Date	Date Payable or Paid	Dividend Per Share
August 1, 2012	October 15, 2012	October 29, 2012	0.11
May 1, 2012	July 16, 2012	July 30, 2012	0.10
February 27, 2012	April 16, 2012	April 30, 2012	0.10

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ORGANIZATION

9 Months Ended

Sep. 30, 2012

ORGANIZATION

ORGANIZATION

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, 2011 which are included in the Company’s annual report on Form 10-K (the “Annual Report”) for the fiscal year ended December 31, 2011, and as recast in the Form 8-K filed on June 27, 2012, (Commission File No. 1-34948), as certain footnote disclosures which would substantially duplicate those contained in our Annual Report have been omitted from this Quarterly 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”, the “Successor” or the “Company”), a Delaware corporation, was organized in July 2010 and is a self-administered and self-managed real estate investment trust, referred to as a “REIT”.  GGP is the successor registrant, by merger, on November 9, 2010 to GGP, Inc. (the “Predecessor”).  The Predecessor had filed for bankruptcy protection under Chapter 11 of Title 11 of the United States Code (“Chapter 11”) in the Southern District of New York on April 16, 2009 and emerged from bankruptcy, pursuant to a plan of reorganization (the “Plan”) on November 9, 2010.  In these notes, the terms “we,” “us” and “our” refer to GGP and its subsidiaries or, in certain contexts, the Predecessor and its subsidiaries.

GGP, through its subsidiaries and affiliates, operates, manages, develops and acquires retail and other rental properties, primarily regional malls, which are predominantly located throughout the United States. GGP also holds assets in Brazil through investments in Unconsolidated Real Estate Affiliates (as defined below).

Substantially all of our business is conducted through GGP Limited Partnership (the “Operating Partnership” or “GGPLP”).   GGPLP owns an interest in all retail and other rental properties that are part of the consolidated financial statements of GGP.  As of September 30, 2012, GGP holds approximately a 99% common equity ownership (without giving effect to the potential conversion of the Preferred Units as defined below) of the Operating Partnership, while the remaining 1% is held by limited partners that indirectly include family members of the original stockholders of the Predecessor and certain previous contributors of properties to the Operating Partnership.

The Operating Partnership also has preferred units of limited partnership interest (the “Preferred Units”) outstanding.  The terms of the Preferred Units provide that the Preferred Units are convertible into Common Units which then are redeemable for cash or, at our option, shares of GGP common stock (Note 9).

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

·GGP-TRC, LLC (“TRCLLC”), formerly known as The Rouse Company, LLC, which has ownership interests in certain Consolidated Properties and Unconsolidated Properties (each as defined below) and is the borrower of certain unsecured bonds (Note 6).

·General Growth Management, Inc. (“GGMI”), a taxable REIT subsidiary (a “TRS”), which manages, leases, and performs various services for some of our Unconsolidated Real Estate Affiliates (defined below).  GGMI also performs marketing and strategic partnership services at all of our Consolidated Properties.

In this Quarterly Report, we refer to our ownership interests in properties in which we own a majority or controlling interest and, as a result, are consolidated under accounting principles generally accepted in the United States of America (“GAAP”) as the “Consolidated Properties.”  We also hold some properties through joint venture entities in which we own a noncontrolling interest (“Unconsolidated Real Estate Affiliates”) and we refer to those properties as the “Unconsolidated Properties”.

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EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2012

EARNINGS PER SHARE

Information related to EPS calculation

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
	Basic and Diluted			Basic and Diluted			Basic and Diluted			Basic and Diluted
Numerators - Basic and Diluted:
Income (loss) from continuing operations	$	(220,184	)	$	260,837		$	(518,183	)	$	75,072
Allocation to noncontrolling interests	(1,203		)	(4,431		)	(6,106		)	(6,665		)
Loss (income) from continuing operations - net of noncontrolling interests	(221,387		)	256,406			(524,289		)	68,407
Discontinued operations	13,576			(4,276		)	10,982			(13,688		)
Allocation to noncontrolling interests	(76		)	(80		)	(130		)	(53		)
Discontinued operations - net of noncontrolling interests	13,500			(4,356		)	10,852			(13,741		)
Net loss	(206,608		)	256,561			(507,201		)	61,384
Allocation to noncontrolling interests	(1,279		)	(4,511		)	(6,236		)	(6,718		)
Net loss (income) attributable to common stockholders	$	(207,887	)	$	252,050		$	(513,437	)	$	54,666
Numerators - Diluted:
Loss from continuing operations - net of noncontrolling interests	$	(221,387	)	$	256,406		$	(524,289	)	$	68,407
Exclusion of warrant adjustment	—			(337,781		)	—			(319,460		)
Diluted loss from continuing operations	$	(221,387	)	$	(81,375	)	$	(524,289	)	$	(251,053	)
Net loss attributable to common stockholders	$	(207,887	)	$	252,050		$	(513,437	)	$	54,666
Exclusion of warrant adjustment	—			(337,781		)	—			(319,460		)
Diluted net loss attributable to common stockholders	$	(207,887	)	$	(85,731	)	$	(513,437	)	$	(264,794	)
Denominators:
Weighted average number of common shares outstanding - basic and diluted	938,316			936,260			937,795			946,743
Effect of dilutive securities	—			34,431			—			39,032
Weighted average number of common shares outstanding - diluted	938,316			970,691			937,795			985,775

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) (USD $)	3 Months Ended	9 Months Ended	3 Months Ended		9 Months Ended		3 Months Ended	9 Months Ended	3 Months Ended
	Sep. 30, 2012 property	Sep. 30, 2012 property	Sep. 30, 2012 Regional Malls and Office Building property	Sep. 30, 2012 Regional Malls property	Sep. 30, 2012 Regional Malls property	Sep. 30, 2012 Regional Malls sold through lender directed sale item	Dec. 31, 2012 Regional Malls sold through lender directed sale Expected	Sep. 30, 2012 Regional Malls other than sold through lender directed sale	Sep. 30, 2012 Office Building property
Impaired assets
Number of impaired operating properties	7	9		3
Impairment charges related to operating properties and properties under development	$ 98,300,000	$ 118,600,000	$ 41,000,000		$ 20,300,000	$ 11,100,000		$ 46,200,000
Nonrecourse notes payable related to impaired assets						64,900,000		166,100,000
Number of properties sold						1
Carrying value net of impairment charges						15,200,000		100,700,000
Gain on extinguishment of debt		$ 9,911,000			$ 9,900,000		$ 50,000,000
Number of impaired operating properties, condition 1			4	2	2				2

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EARNINGS PER SHARE (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Numerators - Basic and Diluted:
Loss from continuing operations	$ (220,184)	$ 260,837	$ (518,183)	$ 75,072
Allocation to noncontrolling interests	(1,203)	(4,431)	(6,106)	(6,665)
Loss (income) from continuing operations - net of noncontrolling interests	(221,387)	256,406	(524,289)	68,407
Discontinued operations	13,576	(4,276)	10,982	(13,688)
Allocation to noncontrolling interests	(76)	(80)	(130)	(53)
Discontinued operations - net of noncontrolling interest	13,500	(4,356)	10,852	(13,741)
Net income (loss)	(206,608)	256,561	(507,201)	61,384
Allocation to noncontrolling interests	(1,279)	(4,511)	(6,236)	(6,718)
Net (loss) income attributable to common stockholders	(207,887)	252,050	(513,437)	54,666
Numerators - Diluted:
Exclusion of warrant adjustment		(337,781)		(319,460)
Diluted loss from continuing operations	(221,387)	(81,375)	(524,289)	(251,053)
Diluted net loss attributable to common stockholders	$ (207,887)	$ (85,731)	$ (513,437)	$ (264,794)
Denominators:
Weighted average number of common shares outstanding - basic	938,316	936,260	937,795	946,743
Effect of dilutive securities		34,431		39,032
Weighted average number of common shares outstanding - diluted	938,316	970,691	937,795	985,775

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Investment in real estate:
Land	$ 4,303,329	$ 4,623,944
Buildings and equipment	18,847,928	19,837,750
Less accumulated depreciation	(1,286,753)	(974,185)
Construction in progress	383,977	135,807
Net property and equipment	22,248,481	23,623,316
Investment in and loans to/from Unconsolidated Real Estate Affiliates	2,717,079	3,052,973
Net investment in real estate	24,965,560	26,676,289
Cash and cash equivalents	637,946	572,872
Accounts and notes receivable, net	243,503	218,749
Deferred expenses, net	176,377	170,012
Prepaid expenses and other assets	1,398,494	1,805,535
Assets held for disposition		74,694
Total assets	27,421,880	29,518,151
Liabilities:
Mortgages, notes and loans payable	16,074,015	17,143,014
Accounts payable and accrued expenses	1,271,364	1,445,738
Dividend payable	106,312	526,332
Deferred tax liabilities	22,520	29,220
Tax indemnification liability	303,750	303,750
Junior Subordinated Notes	206,200	206,200
Warrant liability	1,399,043	985,962
Liabilities held for disposition		74,795
Total liabilities	19,383,204	20,715,011
Redeemable noncontrolling interests:
Preferred	134,531	120,756
Common	132,020	103,039
Total redeemable noncontrolling interests	266,551	223,795
Commitments and Contingencies
Redeemable Preferred Stock: as of September 30, 2012 and December 31, 2011, $0.01 par value, 500,000 shares authorized, none issued and outstanding
Equity:
Common stock: as of September 30, 2012, $0.01 par value, 11,000,000,000 shares authorized and 938,619,521 shares issued and outstanding; as of December 31, 2011, $0.01 par value, 11,000,000,000 shares authorized and 935,307,487 shares issued and outstanding	9,387	9,353
Additional paid-in capital	10,417,657	10,405,318
Retained earnings (accumulated deficit)	(2,661,759)	(1,883,569)
Accumulated other comprehensive loss	(82,026)	(47,773)
Total stockholders' equity	7,683,259	8,483,329
Noncontrolling interests in consolidated real estate affiliates	88,866	96,016
Total equity	7,772,125	8,579,345
Total liabilities and equity	$ 27,421,880	$ 29,518,151

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UNCONSOLIDATED REAL ESTATE AFFILIATES (Details) (Unconsolidated, USD $)	9 Months Ended	12 Months Ended
	Sep. 30, 2012 property	Dec. 31, 2011 property
Unconsolidated
Condensed Combined Financial Information of Unconsolidated Real Estate Affiliates
Aggregate carrying value of retained debt, reflected as a reduction in entity's investment in Unconsolidated Real Estate Affiliates	$ 92,100,000	$ 130,600,000
Number of unconsolidated properties with retained debt	1	2
Indebtedness secured by Unconsolidated Properties	6,260,000,000	5,800,000,000
Entity's proportionate share in indebtedness secured by Unconsolidated Properties including retained debt	$ 2,940,000,000	$ 2,780,000,000

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CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
CONSOLIDATED STATEMENTS OF EQUITY
Issuance of common stock, shares		22,256,121
Restricted stock grant, forfeitures and compensation expense, shares	48,125	282,320
Employee stock purchase program, shares	98,076
Stock options exercised, shares	396,064	97,987
Purchase and cancellation of common shares (in shares)		(34,906,069)
Cash dividends reinvested (DRIP) in stock, shares	2,866,019	4,846,784
Cash distributions declared (in dollars per share)	$ 0.31	$ 0.30

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COMMITMENTS AND CONTINGENCIES (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
COMMITMENTS AND CONTINGENCIES.
Contractual rental expense, including participation rent	$ 3,688	$ 3,147	$ 11,031	$ 10,157
Contractual rent expense, including participation rent and excluding amortization of above- and below-market ground leases and straight-line rent	$ 2,250	$ 1,701	$ 6,714	$ 5,796

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ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables)

9 Months Ended

Sep. 30, 2012

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Schedule of significant components of accounts payable and accrued expenses

	September 30,		December 31,
	2012		2011
Below-market tenant leases, net (Note 3)	$	512,285	$	634,802
Accrued interest	208,008		196,536
Accounts payable and accrued expenses	139,523		164,139
Accrued real estate taxes	95,466		77,722
Deferred gains/income	78,612		65,174
Accrued payroll and other employee liabilities	70,045		77,231
Construction payable	59,094		69,291
Tenant and other deposits	22,937		19,336
Insurance reserve liability	15,866		17,796
Capital lease obligations	12,605		12,774
Above-market headquarter office leases, net (Note 3)	12,299		13,571
Conditional asset retirement obligation liability	12,345		16,596
Above-market ground leases, net (Note 3)	9,045		9,400
Uncertain tax position liability	5,873		6,847
Other	17,361		64,523
Total accounts payable and accrued expenses	$	1,271,364	$	1,445,738

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2012

COMMITMENTS AND CONTINGENCIES.

COMMITMENTS AND CONTINGENCIES

NOTE 15COMMITMENTS AND CONTINGENCIES

We lease land or buildings at certain properties from third parties.  Rental payments are expensed as incurred and have, to the extent applicable, been straight-lined over the term of the lease.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Contractual rent expense, including participation rent	$	3,688	$	3,147	$	11,031	$	10,157
Contractual rent expense, including participation rent and excluding amortization of above- and below-market ground leases and straight-line rent	2,250		1,701		6,714		5,796

See Note 7 and Note 14 for our obligations related to uncertain tax positions and for disclosure of additional contingencies.

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COMMITMENTS AND CONTINGENCIES (Tables)

9 Months Ended

Sep. 30, 2012

COMMITMENTS AND CONTINGENCIES.

Summary of contractual rental expenses

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Contractual rent expense, including participation rent	$	3,688	$	3,147	$	11,031	$	10,157
Contractual rent expense, including participation rent and excluding amortization of above- and below-market ground leases and straight-line rent	2,250		1,701		6,714		5,796

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2012

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Basis of Presentation

Principles of Consolidation and 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 noncontrolling partner’s share of the assets, liabilities and operations of the joint ventures (generally computed as the joint venture partner’s ownership percentage) is included in noncontrolling interests in Consolidated Real Estate Affiliates as permanent equity of the Company. All significant intercompany balances and transactions have been eliminated.

We operate in a single reportable segment referred to as our retail and other segment, which includes the operation, development and management of retail and other rental properties, primarily regional malls.  Our portfolio of regional malls represents a collection of retail properties that are targeted to a range of market sizes and consumer tastes.  Each of our operating properties is considered a separate operating segment, as each property earns revenues and incurs expenses, individual operating results are reviewed and discrete financial information is available.  We do not distinguish or group our consolidated operations based on geography, size or type. Further, all material operations are within the United States and no customer or tenant comprises more than 10% of consolidated revenues.  As a result, the Company’s operating properties are aggregated into a single reportable segment.

The accompanying unaudited consolidated financial statements and related notes have been prepared in accordance with GAAP and in conformity with the rules and regulations of the SEC applicable to interim financial information. As such, certain information and footnote disclosures normally included in complete annual financial statements prepared in accordance with GAAP have been omitted in accordance with the rules and regulations of the SEC.

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 September 30, 2012 are not necessarily indicative of the results to be obtained for the full fiscal year.

Reclassifications

Reclassifications

Certain prior period amounts in the consolidated financial statements have been reclassified to conform to the current period presentation as amounts included on the Consolidated Statements of Operations and Comprehensive Income (Loss) for properties sold have been reclassified to discontinued operations for all periods presented.

In addition, three properties previously classified as held for sale were reclassified as held for use in the first quarter of 2012.  These properties are presented within continuing operations for all periods presented in the accompanying consolidated financial statements (Note 4).

In addition, prior period disclosures related to the Consolidated Statements of Operations and Comprehensive Income (Loss) in the accompanying footnotes have been adjusted for the impacts of discontinued operations.

Transactions with Affiliates

Transactions with Affiliates

Management fees and other corporate 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 are reported at 100% of the revenue earned from the joint venture in management fees and other corporate revenues on our Consolidated Statements of Operations and Comprehensive Income (Loss).  Our share of the management fee expense incurred by the Unconsolidated Real Estate Affiliates is reported within equity in income of Unconsolidated Real Estate Affiliates on our Consolidated Statements of Operations and Comprehensive Income (Loss) and in property management and other costs in the Condensed Combined Statements of Income in Note 5.  The following table summarizes the management fees from affiliates and our share of the management fee expense:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Management fees from affiliates	$	17,565		$	14,177		$	54,445		$	43,363
Management fee expense	(5,370		)	(5,441		)	(17,037		)	(16,171		)
Net management fees from affiliates	$	12,195		$	8,736		$	37,408		$	27,192

In connection with the spin-off of Rouse Properties, Inc. (“RPI Spin-Off”), we have entered into a Transition Services Agreement (“TSA”) with RPI.  In accordance with the TSA, we have agreed to provide legal and other services to RPI for established fees, which were not material for the three and nine months ended September 30, 2012.

Acquisitions of Operating Properties

Acquisitions of Operating Properties

Acquisitions of properties are accounted for utilizing the acquisition method of accounting and, accordingly, the results of operations of acquired properties were included in the results of operations from the respective dates of acquisition.  Estimates of future cash flows and other valuation techniques are used to allocate the purchase price of acquired property between land, buildings and improvements, equipment, debt liabilities assumed and identifiable intangible assets and liabilities such as amounts related to in-place tenant leases, acquired above and below-market tenant and ground leases and tenant relationships. No significant value had been ascribed to the tenant relationships (Note 3).

Impairment

Impairment

Operating properties

Accounting for the impairment of long-lived assets requires that if impairment indicators exist and the undiscounted cash flows expected to be generated by an asset are less than its carrying amount, an impairment provision should be recorded to write down the carrying amount of such asset to its fair value.  We review our consolidated properties for potential impairment indicators whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

Impairment indicators are assessed separately for each property and include, but are not limited to, significant decreases in real estate property net operating income, significant decreases in occupancy percentage, debt maturities, management’s intent with respect to the properties and prevailing market conditions.

Impairment indicators for pre-development costs, which are typically costs incurred during the beginning stages of a potential development and construction in progress, are assessed by project and include, but are not limited to, significant changes in the Company’s plans with respect to the project, significant changes in projected completion dates, tenant demand, anticipated revenues or cash flows, development costs, market factors and sustainability of development projects.

If an indicator of potential impairment exists, the property is tested for recoverability by comparing its carrying amount to the estimated future undiscounted cash flows.  The cash flow estimates used both for determining recoverability and estimating fair value are inherently judgmental and reflect current and projected trends in rental, occupancy and capitalization rates, and estimated holding periods for the applicable properties.  Although the carrying amount may exceed the estimated fair value of certain properties, a real estate asset is only considered to be impaired when its carrying amount cannot be recovered through estimated future undiscounted cash flows.  To the extent an impairment provision is determined to be necessary, the excess of the carrying amount of the property over its estimated fair value is expensed to operations.  In addition, the impairment provision is allocated proportionately to adjust the carrying amount of the asset group.  The adjusted carrying amount, which represents the new cost basis of the property, is depreciated over the remaining useful life of the property.

Although we may market a property for sale, there can be no assurance that the transaction will be complete until the sale is finalized.  However, GAAP requires us to reduce the recoverability periods for these assets.  If we cannot recover the carrying value of these properties within the planned hold period, we will estimate the fair values of the assets and record impairment charges for properties in which the estimated fair value is less than their carrying value.

We recorded impairment charges of $118.6 million on nine of our operating properties during the nine months ended September 30, 2012.  Of these impairment charges, $98.3 million related to seven of our operating properties and were recorded during the three months ended September 30, 2012.  These impairment charges are included in provision for impairment in our Consolidated Statements of Operations and Comprehensive Income (Loss).

During the three months ended September 30, 2012, three of the impairment charges related to regional malls that were transferred to the special servicer.  One of the properties was sold, in a lender directed sale in full satisfaction of the related debt, subsequent to September 30, 2012, for an amount less than the carrying value (Note 16).  Accordingly, we recorded an impairment charge of $11.1 million, resulting in a net book value of $15.2 million, which is less than the carrying value of the non-recourse debt of $64.9 million.  We expect to record a gain on extinguishment of debt of approximately $50 million in the fourth quarter of 2012.  We recorded impairment charges on the other two properties of $46.2 million, resulting in an aggregate net book value of $100.7 million, which is less than the aggregate carrying value of the non-recourse debt of $166.1 million.  These impairment charges were recorded because the estimated fair values of the properties, based on discounted cash flow analyses, were less than the carrying values of the properties.

The remaining four impairment charges recorded during the three months ended September 30, 2012, totaled $41.0 million and related to two regional malls and two small office buildings.  These impairment charges were recorded because the estimated sales prices of these properties were lower than their carrying values.  The estimated sales prices were based on negotiated sales prices finalized in the third quarter of 2012.

During the nine months ended September 30, 2012, we previously recorded two impairment charges that totaled $20.3 million and related to two regional malls as the sales prices of these properties were lower than their carrying values.  These properties were sold in the period in which the impairment was taken.  These impairment charges are included, net of the gain on forgiveness of debt of $9.9 million, in discontinued operations in our Consolidated Statements of Operations and Comprehensive Income (Loss).

Gains on disposition, including settlement of debt, are recorded in the Consolidated Statements of Operations and Comprehensive Income (Loss) in the period the property is disposed.  Impairment charges are recorded in the Consolidated Statements of Operations and Comprehensive Income (Loss) when the carrying value exceeds the estimated fair value of the property, which can occur in accounting periods preceding disposition and / or in the period of disposition.

No provisions for impairment were necessary for the three or nine months ended September 30, 2011.

Investment in Unconsolidated Real Estate Affiliates

According to the guidance related to the equity method of accounting for investments, a series of operating losses of an investee or other factors may indicate that an other-than-temporary decrease in value of our investment in the Unconsolidated Real Estate Affiliates has occurred. The investment in each of the Unconsolidated Real Estate Affiliates is evaluated periodically and as deemed necessary for valuation declines below the carrying amount. Accordingly, in addition to the property-specific impairment analysis that we perform for such joint ventures (as part of our operating property impairment process described above), we also considered whether there were other-than-temporary impairments with respect to the carrying values of our Unconsolidated Real Estate Affiliates.

We did not record any provisions for impairment related to our investments in Unconsolidated Real Estate Affiliates for the three and nine months ended September 30, 2012 and 2011.

General

Impairment charges could be taken in the future if economic conditions change or if the plans regarding our assets change.  Therefore, we can provide no assurance that material impairment charges with respect to our assets, including operating properties, construction in progress and investments in Unconsolidated Real Estate Affiliates, will not occur in future periods.  Accordingly, we will continue to monitor circumstances and events in future periods to determine whether further impairments are warranted.

Fair Value Measurements

Fair Value Measurements

The accounting principles for fair value measurements establish a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.  These tiers include:

·Level 1 - defined as observable inputs such as quoted prices for identical assets or liabilities in active markets;

·Level 2 - defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and

·Level 3 - defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The impairment section above includes a discussion of properties measured at fair value on a non recurring basis using Level 2 and Level 3 inputs.  Fair value of financial instruments below includes a discussion of the fair value of debt, which is estimated using Level 2 and Level 3 inputs.   Note 8 includes a discussion of the warrant liability which is estimated on a recurring basis using Level 3 inputs.

Fair Value of Operating Properties

The following table summarizes our assets that are measured at fair value on a nonrecurring basis as of September 30, 2012.

			Quoted Prices in
			Active Markets		Significant Other		Significant
	Total Fair Value		for Identical Assets		Observable Inputs		Unobservable Inputs
	Measurement		(Level 1)		(Level 2)		(Level 3)
Balance at September 30, 2012
Investments in real estate (1)	$	238,362	$	—	$	137,656	$	100,706

(1) Refer to the impairment section above for more information regarding impairment.

We estimate fair value relating to impairment assessments based upon discounted cash flow and direct capitalization models that include all projected cash inflows and outflows over a specific holding period, or the negotiated sales price, if applicable.  Such projected cash flows are comprised of contractual rental revenues and forecasted rental revenues and expenses based upon market conditions and expectations for growth. Capitalization rates and discount rates utilized in these models are based on a reasonable range of current market rates for each property analyzed.  Based upon these inputs, we determined that our valuations of properties using a discounted cash flow or a direct capitalization model were classified within Level 3 of the fair value hierarchy.  For our properties for which the estimated fair value was based on negotiated sales prices, we determined that our valuation was classified within Level 2 of the fair value hierarchy.

The following table summarizes provisions for impairment recorded in our Consolidated Statements of Operations and Comprehensive Income (Loss) as a result of changes in the fair value of our investments in real estate:

	Provisions for Impairment
	Three Months Ended September 30, 2012			Nine Months Ended September 30, 2012
Investments in real estate (1) (2)
Significant Other Observable Inputs (Level 2)	$	(52,048	)	$	(72,348	)
Significant Unobservable Inputs (Level 3)	(46,240		)	(46,240		)

(1) Refer to the impairment section above for more information regarding impairment.

(2) Certain of the properties impaired during the year have been subsequently sold.  As such, these impairment charges are included in discontinued operations in our Consolidated Statements of Operations and Comprehensive Income (Loss).

The following table sets forth quantitative information about the unobservable inputs of our Level 3 real estate, which are recorded at fair value as of September 30, 2012:

Unobservable Quantitative Input	Range
Discount rates	9.0% to 10.0%
Terminal capitalization rates	9.0% to 10.0%

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The fair values of our financial instruments approximate their carrying amount in our consolidated financial statements except for debt.  Management’s estimates of fair value are presented below for our debt as of September 30, 2012 and December 31, 2011.

	September 30, 2012				December 31, 2011
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Fixed-rate debt	$	14,246,457	$	15,338,267	$	14,795,370	$	14,978,908
Variable-rate debt	1,827,558		1,724,031		2,347,644		2,326,533
	$	16,074,015	$	17,062,298	$	17,143,014	$	17,305,441

The fair value of our Junior Subordinated Notes approximates their carrying amount as of September 30, 2012 and December 31, 2011.  We estimated the fair value of mortgages, notes and other loans payable using Level 2 and Level 3 inputs based on recent financing transactions, estimates of the fair value of the property that serves as collateral for such debt, historical risk premiums for loans of comparable quality, current London Interbank Offered Rate (“LIBOR”), U.S. treasury obligation interest rates and on the discounted estimated future cash payments to be made on such debt. The discount rates estimated reflect our judgment as to what the approximate current lending rates for loans or groups of loans with similar maturities and credit quality would be if credit markets were operating efficiently and assume that the debt is outstanding through maturity. We have utilized market information as available or present value techniques to estimate the amounts required to be disclosed.  Since such amounts are estimates that are based on limited available market information for similar transactions and do not acknowledge transfer or other repayment restrictions that may exist in specific loans, it is unlikely that the estimated fair value of any such debt could be realized by immediate settlement of the obligation.

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Cash Flows from Operating Activities:
Net (loss) income	$ (507,201)	$ 61,384
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Equity in (income) loss of Unconsolidated Real Estate Affiliates	(39,849)	2,534
Distributions received from Unconsolidated Real Estate Affiliates	30,021	21,996
Provision for doubtful accounts	3,264	4,733
Depreciation and amortization	621,388	755,152
Amortization/write-off of deferred finance costs	3,576	1,925
Accretion/write-off of debt market rate adjustments	(42,446)	(57,056)
Amortization of intangibles other than in-place leases	79,504	104,691
Straight-line rent amortization	(51,049)	(78,272)
Gain on dispositions	(13,037)	(1,822)
Gain from change in control of investment properties	(18,547)
Gain on extinguishment of debt	(9,911)
Provisions for impairment	118,588
Warrant liability adjustment	413,081	(319,460)
Net changes:
Accounts and notes receivable	31,041	(4,628)
Prepaid expenses and other assets	(1,104)	34,115
Deferred expenses	(34,838)	(14,936)
Restricted cash	62,652	15,681
Accounts payable and accrued expenses	(48,870)	(123,001)
Other, net	10,994	(7,234)
Net cash provided by operating activities	607,257	395,802
Cash Flows from Investing Activities:
Acquisition/development of real estate and property additions/improvements	(584,246)	(180,506)
Proceeds from sales of investment properties	194,269	446,765
Proceeds from sales of investment in Unconsolidated Real Estate Affiliates		74,906
Contributions to Unconsolidated Real Estate Affiliates	(62,139)	(55,999)
Distributions received from Unconsolidated Real Estate Affiliates in excess of income	289,366	49,147
Decrease (increase) in restricted cash	6,195	(87,822)
Net cash (used in) provided by investing activities	(156,555)	246,491
Cash Flows from Financing Activities:
Proceeds from refinance/issuance of mortgages, notes and loans payable	3,892,525	2,145,848
Principal payments on mortgages, notes and loans payable	(4,022,632)	(2,600,840)
Deferred finance costs	(27,254)	(20,032)
Cash distributions paid to common stockholders	(281,089)	(225,830)
Cash distributions reinvested (DRIP) in common stock	43,839	80,708
Cash distributions paid to holders of common units	(1,543)	(6,802)
Purchase and cancellation of common shares		(543,015)
Other, net	10,526	(952)
Net cash used in financing activities	(385,628)	(1,170,915)
Net change in cash and cash equivalents	65,074	(528,622)
Cash and cash equivalents at beginning of period	572,872	1,021,311
Cash and cash equivalents at end of period	637,946	492,689
Supplemental Disclosure of Cash Flow Information:
Interest paid	631,844	719,903
Interest capitalized	780	1,704
Income taxes paid	2,598	8,222
Reorganization items paid		128,070
Third party property exchange		44,672
Non-Cash Transactions:
Change in accrued capital expenditures included in accounts payable and accrued expenses	1,170	(11,463)
Debt payoffs via deeds in-lieu		161,524
Note receivable related to property sale	17,000
Rouse Properties, Inc. Dividend:
Adjustment to dividend for RPI Spin-off	(26,044)
Non-Cash Distribution of RPI Spin-off:
Assets	1,554,486
Liabilities and equity	(1,554,486)
Non-Cash Sale of Property to RPI:
Assets	63,672
Liabilities	(63,672)
Non-Cash Acquisition of The Oaks and Westroads:
Assets	218,071
Liabilities and equity	(218,071)
Decrease in assets and liabilities resulting from the contribution of a wholly owned mall into a newly formed unconsolidated joint venture
Assets		(336,744)
Liabilities		$ (238,126)

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Sep. 30, 2012	Dec. 31, 2011
CONSOLIDATED BALANCE SHEETS
Redeemable Preferred Stock, par value (in dollars per share)	$ 0.01	$ 0.01
Redeemable Preferred Stock, shares authorized	500,000	500,000
Redeemable Preferred Stock, shares issued	0	0
Redeemable Preferred Stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	11,000,000,000	11,000,000,000
Common stock, shares issued	938,619,521	935,307,487
Common stock, shares outstanding	938,619,521	935,307,487

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EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2012

EARNINGS PER SHARE

EARNINGS PER SHARE

NOTE 10      EARNINGS PER SHARE

Basic earnings per share (“EPS”) is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding.  Diluted EPS is computed after adjusting the numerator and denominator of the basic EPS computation for the effects of all potentially dilutive common shares.  The dilutive effect of the Warrants are computed using the “if-converted” method and the dilutive effect of options and their equivalents (including fixed awards and nonvested stock issued under stock-based compensation plans), is computed using the “treasury” method.

All options were anti-dilutive for the three months and nine months ended September 30, 2012 because of net losses.  All options were anti-dilutive for the three months and nine months ended September 30, 2011, as the impact of the warrant adjustment reduced income from continuing operations to a loss.  As such, the effect of options has been excluded from the calculation of diluted net loss per share for all periods presented.  Potentially dilutive shares related to the warrants of 65,689,708 for the three months ended September 30, 2012 and 58,781,182 for the nine months ended September 30, 2012 have been excluded from the denominator in the computation of diluted EPS as they were anti-dilutive.  The warrants were dilutive for the three and nine months ended September 30, 2011 and the effect of the warrants is included in the denominator in the computation of diluted EPS. Outstanding Common Units have also been excluded from the diluted earnings per share calculation because including such Common Units would also require that the share of GGPLP income attributable to such Common Units be added back to net income therefore resulting in no effect on EPS.

Information related to our EPS calculations is summarized as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
	Basic and Diluted			Basic and Diluted			Basic and Diluted			Basic and Diluted
Numerators - Basic and Diluted:
Income (loss) from continuing operations	$	(220,184	)	$	260,837		$	(518,183	)	$	75,072
Allocation to noncontrolling interests	(1,203		)	(4,431		)	(6,106		)	(6,665		)
Loss (income) from continuing operations - net of noncontrolling interests	(221,387		)	256,406			(524,289		)	68,407
Discontinued operations	13,576			(4,276		)	10,982			(13,688		)
Allocation to noncontrolling interests	(76		)	(80		)	(130		)	(53		)
Discontinued operations - net of noncontrolling interests	13,500			(4,356		)	10,852			(13,741		)
Net loss	(206,608		)	256,561			(507,201		)	61,384
Allocation to noncontrolling interests	(1,279		)	(4,511		)	(6,236		)	(6,718		)
Net loss (income) attributable to common stockholders	$	(207,887	)	$	252,050		$	(513,437	)	$	54,666
Numerators - Diluted:
Loss from continuing operations - net of noncontrolling interests	$	(221,387	)	$	256,406		$	(524,289	)	$	68,407
Exclusion of warrant adjustment	—			(337,781		)	—			(319,460		)
Diluted loss from continuing operations	$	(221,387	)	$	(81,375	)	$	(524,289	)	$	(251,053	)
Net loss attributable to common stockholders	$	(207,887	)	$	252,050		$	(513,437	)	$	54,666
Exclusion of warrant adjustment	—			(337,781		)	—			(319,460		)
Diluted net loss attributable to common stockholders	$	(207,887	)	$	(85,731	)	$	(513,437	)	$	(264,794	)
Denominators:
Weighted average number of common shares outstanding - basic and diluted	938,316			936,260			937,795			946,743
Effect of dilutive securities	—			34,431			—			39,032
Weighted average number of common shares outstanding - diluted	938,316			970,691			937,795			985,775

XML

Document and Entity Information	9 Months Ended
	Sep. 30, 2012	Nov. 01, 2012
Document and Entity Information
Entity Registrant Name	General Growth Properties, Inc.
Entity Central Index Key	0001496048
Document Type	10-Q
Document Period End Date	Sep. 30, 2012
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		938,881,500
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3

XML

STOCK-BASED COMPENSATION PLANS

9 Months Ended

Sep. 30, 2012

STOCK-BASED COMPENSATION PLANS

STOCK-BASED COMPENSATION PLANS

NOTE 11      STOCK-BASED COMPENSATION PLANS

The General Growth Properties, Inc. 2010 Equity Plan (the “Equity Plan”) provides for grants of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, and other stock-based awards and performance-based compensation.  Stock-based compensation expense associated with the Equity Plan and outstanding options granted by the Predecessor and converted into options of the Successor are summarized in the following table:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Stock options - Property management and other costs	$	732	$	518	$	2,402	$	1,710
Stock options - General and administrative	1,593		1,594		4,704		3,861
Restricted stock - Property management and other costs	372		707		1,269		2,662
Restricted stock - General and administrative	1,982		2,264		5,948		6,536
Total	$	4,679	$	5,083	$	14,323	$	14,769

The following table summarizes stock option activity for the nine months ended September 30, 2012 and 2011:

	2012				2011
			Weighted				Weighted
			Average				Average
			Exercise				Exercise
	Shares		Price		Shares		Price
Stock options Outstanding at January 1,	11,503,869		$	15.65	5,427,011		$	20.21
Granted	—		—		8,262,716		15.31
Exercised	(386,029	)	13.56		(51,988	)	11.05
Forfeited	(351,856	)	14.65		(1,054,479	)	14.78
Expired	(499,088	)	46.39		(927,078	)	39.31
Stock options Outstanding at September 30,	10,266,896		$	13.64	11,656,182		$	15.68

There was no significant restricted stock activity for the three and nine months ended September 30, 2012 and 2011.

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CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Revenues:
Minimum rents	$ 401,259	$ 383,541	$ 1,175,365	$ 1,158,479
Tenant recoveries	184,869	189,942	542,784	547,157
Overage rents	12,835	12,823	34,230	29,291
Management fees and other corporate revenues	17,823	14,188	55,646	43,775
Other	16,387	16,488	49,802	47,357
Total revenues	633,173	616,982	1,857,827	1,826,059
Expenses:
Real estate taxes	59,258	56,530	174,797	173,898
Property maintenance costs	18,758	21,419	62,102	71,128
Marketing	8,085	7,639	22,497	19,937
Other property operating costs	101,890	107,631	286,170	290,629
Provision for doubtful accounts	1,370	1,078	3,097	2,295
Property management and other costs	38,903	45,455	119,350	137,517
General and administrative	10,045	15,441	31,675	18,067
Provisions for impairment	98,288		98,288
Depreciation and amortization	208,833	226,360	612,188	675,536
Total expenses	545,430	481,553	1,410,164	1,389,007
Operating income	87,743	135,429	447,663	437,052
Interest income	766	680	2,307	1,912
Interest expense	(204,917)	(218,932)	(607,915)	(672,936)
Warrant liability adjustment	(123,381)	337,781	(413,081)	319,460
Gain from change in control of investment properties			18,547
Loss before income taxes, equity in income (loss) of Unconsolidated Real Estate Affiliates, discontinued operations and allocation to noncontrolling interests	(239,789)	254,958	(552,479)	85,488
Provision for income taxes	(2,449)	(3,954)	(5,553)	(7,882)
Equity in income (loss) of Unconsolidated Real Estate Affiliates	22,054	9,833	39,849	(2,534)
Income (loss) from continuing operations	(220,184)	260,837	(518,183)	75,072
Discontinued operations	13,576	(4,276)	10,982	(13,688)
Net (loss) income	(206,608)	256,561	(507,201)	61,384
Allocation to noncontrolling interests	(1,279)	(4,511)	(6,236)	(6,718)
Net (loss) income attributable to common stockholders	(207,887)	252,050	(513,437)	54,666
Basic Earnings (Loss) Per Share:
Continuing operations (in dollars per share)	$ (0.24)	$ 0.27	$ (0.56)	$ 0.07
Discontinued operations (in dollars per share)	$ 0.01		$ 0.01	$ (0.01)
Total basic earnings (loss) per share (in dollars per share)	$ (0.23)	$ 0.27	$ (0.55)	$ 0.06
Diluted Loss Per Share:
Continuing operations (in dollars per share)	$ (0.24)	$ (0.08)	$ (0.56)	$ (0.26)
Discontinued operations (in dollars per share)	$ 0.01		$ 0.01	$ (0.01)
Total diluted loss per share (in dollars per share)	$ (0.23)	$ (0.08)	$ (0.55)	$ (0.27)
Dividends declared per share (in dollars per share)	$ 0.11	$ 0.10	$ 0.31	$ 0.30
Comprehensive Income (Loss), Net:
Net income (loss)	(206,608)	256,561	(507,201)	61,384
Other comprehensive loss:
Net unrealized losses on financial instruments				(1)
Foreign currency translation	(842)	(85,935)	(35,202)	(43,055)
Unrealized gains (losses) on available-for-sale securities	606	(8)	716	(3)
Other comprehensive loss	(236)	(85,943)	(34,486)	(43,059)
Comprehensive (loss) income	(206,844)	170,618	(541,687)	18,325
Comprehensive loss allocated to noncontrolling interests	(1,284)	(3,899)	(6,003)	(6,416)
Comprehensive (loss) income, net attributable to common stockholders	$ (208,128)	$ 166,719	$ (547,690)	$ 11,909

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UNCONSOLIDATED REAL ESTATE AFFILIATES

9 Months Ended

Sep. 30, 2012

UNCONSOLIDATED REAL ESTATE AFFILIATES

UNCONSOLIDATED REAL ESTATE AFFILIATES

NOTE 5        UNCONSOLIDATED REAL ESTATE AFFILIATES

The Unconsolidated Real Estate Affiliates represents our investments in real estate joint ventures that are not consolidated. Generally, we share in the profits and losses, cash flows and other matters relating to our investments in Unconsolidated Real Estate Affiliates in accordance with our respective ownership percentages.  We manage most of the properties owned by these joint ventures.  As we have joint control of these ventures with our venture partners, we account for these joint ventures under the equity method.

In certain circumstances, we have debt obligations in excess of our pro rata share of the debt of our Unconsolidated Real Estate Affiliates (“Retained Debt”). This Retained Debt represents distributed debt proceeds of the Unconsolidated Real Estate Affiliates in excess of our pro rata share of the non-recourse mortgage indebtedness of such Unconsolidated Real Estate Affiliates. The proceeds of the Retained Debt which are distributed to us are included as a reduction in our investment in Unconsolidated Real Estate Affiliates.  Such Retained Debt existed at one property and totaled $92.1 million as of September 30, 2012 and existed at two properties and totaled $130.6 million as of December 31, 2011.  We are obligated to contribute funds to our Unconsolidated Real Estate Affiliates in amounts sufficient to pay debt service on such Retained Debt.  If we do not contribute such funds, our distributions from such Unconsolidated Real Estate Affiliates, or our interest in, could be reduced to the extent of such deficiencies.  As of September 30, 2012, we do not anticipate an inability to perform on our obligations with respect to such Retained Debt.

Indebtedness secured by our Unconsolidated Properties was $6.26 billion as of September 30, 2012 and $5.80 billion as of December 31, 2011 due to additional excess proceeds as a result of refinancings.  Our proportionate share of such debt was $2.94 billion as of September 30, 2012 and $2.78 billion as of December 31, 2011, including Retained Debt.  There can be no assurance that the Unconsolidated Properties will be able to refinance or restructure such debt on acceptable terms or otherwise, or that joint venture operations or contributions by us and/or our partners will be sufficient to repay such loans.

Condensed Combined Financial Information of Unconsolidated Real Estate Affiliates

Following is summarized financial information for our Unconsolidated Real Estate Affiliates.

	September 30,			December 31,
	2012			2011
Condensed Combined Balance Sheets - Unconsolidated Real Estate Affiliates
Assets:
Land	$	956,214		$	953,603
Buildings and equipment	7,608,675			7,906,346
Less accumulated depreciation	(2,027,208		)	(1,950,860		)
Construction in progress	152,659			99,352
Net property and equipment	6,690,340			7,008,441
Investments in unconsolidated joint ventures	1,104,360			758,372
Net investment in real estate	7,794,700			7,766,813
Cash and cash equivalents	267,468			387,549
Accounts and notes receivable, net	157,618			162,822
Deferred expenses, net	297,516			250,865
Prepaid expenses and other assets	163,110			143,021
Total assets	$	8,680,412		$	8,711,070
Liabilities and Owners’ Equity:
Mortgages, notes and loans payable	$	6,259,558		$	5,790,509
Accounts payable, accrued expenses and other liabilities	433,871			446,462
Owners’ equity	1,986,983			2,474,099
Total liabilities and owners’ equity	$	8,680,412		$	8,711,070
Investment In and Loans To/From Unconsolidated Real Estate Affiliates, Net:
Owners’ equity	$	1,986,983		$	2,474,099
Less joint venture partners’ equity	(1,142,358		)	(1,417,682		)
Capital or basis differences	1,872,454			1,996,556
Investment in and loans to/from
Unconsolidated Real Estate Affiliates, net	$	2,717,079		$	3,052,973

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Condensed Combined Statements of Income - Unconsolidated Real Estate Affiliates
Revenues:
Minimum rents	$	188,299		$	174,587		$	573,276		$	528,495
Tenant recoveries	74,767			72,571			225,059			219,604
Overage rents	5,788			4,766			16,743			12,024
Management and other fees	4,945			3,657			17,087			12,431
Other	7,659			26,381			40,046			40,831
Total revenues	281,458			281,962			872,211			813,385
Expenses:
Real estate taxes	23,927			21,885			71,858			67,728
Property maintenance costs	8,838			9,219			27,652			29,296
Marketing	4,080			4,214			10,894			10,628
Other property operating costs	42,232			43,524			120,561			122,234
Provision for doubtful accounts	943			2,573			1,711			6,422
Property management and other costs	11,388			11,411			36,113			33,956
General and administrative	5,447			5,007			25,544			19,271
Depreciation and amortization	65,189			64,973			203,976			196,227
Total expenses	162,044			162,806			498,309			485,762
Operating income	119,414			119,156			373,902			327,623
Interest income	2,400			5,005			8,114			15,339
Interest expense	(85,121		)	(90,858		)	(253,938		)	(265,770		)
Provision for income taxes	(221		)	(213		)	(672		)	(585		)
Equity in income of unconsolidated joint ventures	15,309			20,820			33,222			39,055
Income from continuing operations	51,781			53,910			160,628			115,662
Discontinued operations	398			(784		)	(543		)	111,399
Allocation to noncontrolling interests	(535		)	(459		)	(1,267		)	(3,435		)
Net income attributable to the ventures	$	51,644		$	52,667		$	158,818		$	223,626
Equity In Income (Loss) of Unconsolidated Real Estate Affiliates:
Net income attributable to the ventures	$	51,644		$	52,667		$	158,818		$	223,626
Joint venture partners’ share of income	(30,050		)	(32,352		)	(95,005		)	(123,495		)
Amortization of capital or basis differences	460			(10,482		)	(23,964		)	(102,665		)
Equity in income (loss) of Unconsolidated Real Estate Affiliates	$	22,054		$	9,833		$	39,849		$	(2,534	)

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DISPOSITIONS, DISCONTINUED OPERATIONS AND GAINS (LOSSES) ON DISPOSITIONS OF INTERESTS IN OPERATING PROPERTIES

9 Months Ended

Sep. 30, 2012

DISPOSITIONS, DISCONTINUED OPERATIONS AND GAINS (LOSSES) ON DISPOSITIONS OF INTERESTS IN OPERATING PROPERTIES

DISPOSITIONS, DISCONTINUED OPERATIONS AND GAINS (LOSSES) ON DISPOSITIONS OF INTERESTS IN OPERATING PROPERTIES

NOTE 4        DISPOSITIONS, DISCONTINUED OPERATIONS AND GAINS (LOSSES) ON DISPOSITIONS OF INTERESTS IN OPERATING PROPERTIES

During the three months ended September 30, 2012, we sold our interests in one office portfolio, two regional malls, four strip centers and one office building for an aggregate sales price of $216.6 million.  We utilized the proceeds from these sales to paydown $89.8 million of debt associated with these properties resulting in net proceeds of $126.8 million and a gain of $13.2 million.  The office property was sold to HHC.  HHC assumed the remaining $19.2 million of the debt on the property as consideration for the sale.

On March 2, 2012, we sold our interest in one regional mall for $25.0 million.  We received $8.0 million in cash and entered into a secured note receivable with the buyer for $17.0 million.

On February 21, 2012, we sold Grand Traverse Mall to RPI.  Prior to the sale, the lender forgave $18.9 million of the secured indebtedness, which was partially offset by the write-off of debt market rate adjustments of $9.0 million.  The net gain on extinguishment of debt, of $9.9 million, is included in discontinued operations in our Consolidated Statements of Operations and Comprehensive Income (Loss).  RPI assumed the remaining $62.0 million of debt on the property as consideration for the sale.

On January 12, 2012, we completed the spin-off of RPI, a 30-mall portfolio totaling approximately 21 million square feet.  The RPI Spin-off was accomplished through a special dividend of the common stock of RPI to holders of GGP common stock as of December 30, 2011.  Subsequent to the spin-off, we retained a 1% interest in RPI.

All of our 2012 and 2011 dispositions are included in discontinued operations in our Consolidated Statements of Operations and Comprehensive Income (Loss) and are summarized in the table below.  In the first quarter of 2012, we revised our intent with respect to four properties previously classified as held for sale.  As we no longer met the criteria for held for sale treatment, we reclassified these four properties as held for use in our Consolidated Balance Sheet.  Three of these properties are presented within continuing operations and one property, which was subsequently sold, is presented within discontinued operations for all periods presented. These properties were measured at the lower of the carrying amount before the asset was classified as held for sale, adjusted for any depreciation and amortization expense that would have been recognized had the asset been continuously classified as held and used, and fair value at the date of decision not to sell.

The following table summarizes the operations of the properties included in discontinued operations.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
	(In thousands)
Retail and other revenue	$	4,858		$	82,258		$	38,620		$	260,156
Retail and other operating expenses	3,933			69,023			23,440			206,264
Provisions for impairment	—			—			10,393			51
Total expenses	3,933			69,023			33,833			206,315
Operating income	925			13,235			4,787			53,841
Interest expense, net	(561		)	(19,628		)	(6,819		)	(68,705		)
Net income (loss) from operations	364			(6,393		)	(2,032		)	(14,864		)
Provision for income taxes	—			(158		)	(23		)	(500		)
Allocation to noncontrolling interest	—			(93		)	—			(146		)
Gain on dispositions	13,212			2,368			13,037			1,822
Net income (loss) from discontinued operations	$	13,576		$	(4,276	)	$	10,982		$	(13,688	)

* Includes a net gain on debt extinguishment of $9.9 million during the nine months ended September 30, 2012.

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SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2012

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

NOTE 16SUBSEQUENT EVENTS

On October 9, 2012, we acquired an additional interest in Aliansce Shopping Centers S.A from certain affiliates of Pershing Square Capital Management, L.P. for $195.2 million.  The additional 14.1% interest increased our total investment in our Brazilian Unconsolidated Real Estate Affiliate to approximately 45.56%.

On October 11, 2012, one property that was transferred to the special servicer was auctioned in a lender directed sale for a sales price of $15.2 million.  The lender accepted the auction amount in lieu of the outstanding debt on the property of $65.0 million.  In accordance with the terms of the auction, the buyer has 30 days to complete the sale.  The closing date is tentatively scheduled for November 12, 2012.

On October 19, 2012, we closed on an $835.0 million loan with a fixed rate of 4.033% that matures in 2024, resulting in proceeds of $222.5 million.  The new loan replaces a $612.5 million loan with an interest rate of LIBOR plus 3% that was scheduled to mature in May 2017.

On October 30, 2012, we sold our interest in one regional mall for $43.5 million, which resulted in a nominal gain.  In addition, we reduced our debt by $37.7 million, as we repaid the loan with proceeds from the sale.

According to Sandeep Mathrani’s employment agreement that was entered into in October 2010, he was granted 1,500,000 shares of restricted common stock which vest in three equal installments on each of the first three anniversaries of the grant date.  On October 31, 2012, with the approval of the Compensation Committee, Mr. Mathrani’s restricted common stock award was amended to defer the vesting of 500,000 shares of restricted stock until October 2013.  There was no change in compensation expense as a result of the award vesting modification.

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PREPAID EXPENSES AND OTHER ASSETS

9 Months Ended

Sep. 30, 2012

PREPAID EXPENSES AND OTHER ASSETS

PREPAID EXPENSES AND OTHER ASSETS

NOTE 12      PREPAID EXPENSES AND OTHER ASSETS

The following table summarizes the significant components of prepaid expenses and other assets.

	September 30,		December 31,
	2012		2011
Above-market tenant leases, net (Note 3)	$	865,510	$	1,163,754
Below-market ground leases, net (Note 3)	188,146		198,230
Security and escrow deposits	152,166		247,718
Real estate tax stabilization agreement, net (Note 3)	99,561		104,295
Prepaid expenses	68,236		51,928
Other non-tenant receivables	7,697		21,198
Deferred tax, net of valuation allowances	529		4,578
Other	16,649		13,834
Total prepaid expenses and other assets	$	1,398,494	$	1,805,535

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WARRANT LIABILITY

9 Months Ended

Sep. 30, 2012

WARRANT LIABILITY

WARRANT LIABILITY

NOTE 8        WARRANT LIABILITY

Pursuant to the terms of the Investment Agreements, the Plan Sponsors and Blackstone were issued 120,000,000 warrants (the “Warrants”) to purchase common stock of GGP.  Each GGP Warrant has a term of seven years and expires on November 9, 2017 and no warrants have been exercised to date.  The Brookfield Investor Warrants and the Blackstone (A and B) Investor Warrants are immediately exercisable, while the Fairholme Warrants and the Pershing Square Warrants will be exercisable (for the initial 6.5 years from the issuance) only upon 90 days prior notice.   However, upon such notice Fairholme and Pershing Square are not obligated to exercise at any point from the end of the 90 day notification period through maturity. Below is a summary of the Warrants initially received by the Plan Sponsors and Blackstone.

		Initial
Warrant Holder	Number of Warrants	Exercise Price
Brookfield Investor	57,500,000	$	10.75
Blackstone - B	2,500,000	10.75
Fairholme	41,070,000	10.50
Pershing Square	16,430,000	10.50
Blackstone - A	2,500,000	10.50
	120,000,000

The Warrants were fully vested upon issuance and the exercise prices are subject to adjustment for future dividends, stock dividends, distribution of assets, stock splits or reverse splits of our common stock or certain other events. In accordance with the agreement, these calculations adjust both the exercise price and the number of shares issuable for the 120,000,000 Warrants. As a result of these investment provisions, as of the record date of our common stock dividends, the number of shares issuable upon exercise of the outstanding Warrants was increased as follows:

	Exercise Price
Record Date	Issuable Shares	Brookfield Investor and Blackstone - B		Fairholme, Pershing Square and Blackstone - A
April 15, 2011	123,960,000	$	10.41	$	10.16
July 15, 2011	124,704,000	10.34		10.10
December 30, 2011	131,748,000	9.79		9.56
April 16, 2012	132,372,000	9.75		9.52
July 16, 2012	133,116,000	9.69		9.47

In addition to the adjustment for the common stock dividends, as a result of the RPI Spin-off, the exercise price of the Warrants was adjusted by $0.3943 for the Brookfield Investor and Blackstone-B Warrants and by $0.3852 for the Fairholme, Pershing Square and Blackstone-A Warrants, on the record date of December 30, 2011. As a result, the total number of issuable shares was 131,748,000.  During the three months ended September 30, 2012, as required per the terms of the Warrant Agreement, Fairholme gave notice of their intent to exercise their Warrants.  As noted above, the Warrants require a 90 day notification period prior to exercise. Fairholme is not required to exercise its Warrants as a result of the notice at any time after the 90 day period and prior to the maturity of the Warrants.

The estimated fair value of the Warrants was $1.40 billion as of September 30, 2012 and $986.0 million as of December 31, 2011 and is recorded as a liability as the holders of the Warrants may require GGP to settle such warrants in cash in the circumstance of a subsequent change of control.  Changes in the fair value of the Warrants are recognized in earnings.  The fair value of the Warrants was estimated using the Black Scholes option pricing model using our stock price, the Warrant term, and Level 3 inputs (Note 2).  An increase in GGP’s common stock price or in the expected volatility of the Warrants would increase the fair value; whereas, a decrease in GGP’s common stock price or an increase in the lack of marketability would decrease the fair value.  The discount for lack of marketability represents the costs associated with selling the warrants to another party.  The terms of the Warrants were not adjusted when determining the fair value as a result of the notice from Fairholme discussed above.  The following table summarizes the estimated fair value of the Warrants and significant observable and unobservable inputs used in the valuation as of September 30, 2012 and December 31, 2011:

	September 30, 2012			December 31, 2011
Warrant liability	$	1,399,043		$	985,962
Observable Inputs
GGP stock price per share	$	19.48		$	15.02
Warrant term	5.11			5.86
Unobservable Inputs
Expected volatility	30		%	37		%
Range of values considered	(15% - 70		)%	(20% - 65		)%
Discount for lack of marketability	3		%	3		%
Range of values considered	(3% - 7		)%	(3% - 7		)%

The following table summarizes the change in fair value of the Warrant liability which is measured on a recurring basis using Level 3 inputs:

	2012		2011
Balance as of January 1,	$	985,962	$	1,041,004
Warrant liability adjustment	413,081		(319,460		)
Balance as of September 30,	$	1,399,043	$	721,544

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SUBSEQUENT EVENTS (Details) (USD $)	3 Months Ended	9 Months Ended		1 Months Ended	0 Months Ended	1 Months Ended			1 Months Ended		1 Months Ended		3 Months Ended	1 Months Ended
	Sep. 30, 2012	Sep. 30, 2012	Dec. 31, 2011	Oct. 31, 2012 Subsequent event Restricted Stock Sandeep Mathrani	Oct. 19, 2012 Subsequent event Fixed rate loan maturing 2024	Oct. 31, 2012 Subsequent event Fixed rate loan maturing 2024	Oct. 31, 2012 Subsequent event Variable rate loan maturing 2017	Oct. 19, 2012 Subsequent event Variable rate loan maturing 2017	Oct. 31, 2012 Subsequent event Aliansce Shopping Centers S.A	Oct. 09, 2012 Subsequent event Aliansce Shopping Centers S.A	Oct. 31, 2012 Subsequent event One Property	Oct. 11, 2012 Subsequent event One Property	Dec. 31, 2012 Subsequent event One Property Maximum	Oct. 31, 2012 Subsequent event One Regional Mall Property Member
SUBSEQUENT EVENTS
Investment in joint venture									$ 195,200,000
Additional interest acquired (as a percent)										14.10%
Owenership interest in joint venture (as a percent)										45.56%
Sale Price	216,600,000										15,200,000			43,500,000
Debt on the property paid down with proceeds from sale	89,800,000	89,800,000										65,000,000
Period for disposition of properties													30 days
Fixed-rate debt	14,246,457,000	14,246,457,000	14,795,370,000
Fixed-rate debt					835,000,000
Interest rate (as a percent)					4.033%
Proceeds from issuance of debt						222,500,000
Variable-rate debt	1,827,558,000	1,827,558,000	2,347,644,000					612,500,000
Variable rate basis		LIBOR					LIBOR
Basis spread on variable rate (as a percent)								3.00%
Repayment of debt														$ 37,700,000
Number of shares granted under employment agreement				1,500,000
Vesting period				3 years
Restricted common stock vesting in October 2011				0.33
Number of shares with deferred vesting				500,000

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MORTGAGES, NOTES AND LOANS PAYABLE

9 Months Ended

Sep. 30, 2012

MORTGAGES, NOTES AND LOANS PAYABLE

MORTGAGES, NOTES AND LOANS PAYABLE

NOTE 6        MORTGAGES, NOTES AND LOANS PAYABLE

Mortgages, notes and loans payable are summarized as follows:

	September 30,		December 31,
	2012		2011
Fixed-rate debt:
Collateralized mortgages, notes and loans payable	$	12,909,868	$	13,091,080
Corporate and other unsecured term loans	1,336,589		1,704,290
Total fixed-rate debt	14,246,457		14,795,370
Variable-rate debt:
Collateralized mortgages, notes and loans payable	1,827,558		2,347,644
Total Mortgages, notes and loans payable	$	16,074,015	$	17,143,014
Variable-rate debt:
Junior Subordinated Notes	$	206,200	$	206,200

The weighted-average interest rate excluding the effects of deferred finance costs on our collateralized mortgages, notes and loans payable was 4.81% at September 30, 2012 and 5.13% at December 31, 2011.  The weighted average interest rate on the remaining corporate unsecured fixed and variable rate debt was 5.98% at September 30, 2012 and 6.18% at December 31, 2011.

We are not aware of any instances of non-compliance with our financial covenants related to our mortgages, notes and loans payable as of September 30, 2012.  However, we have transferred three properties to the special servicer.  One of these properties was sold in a lender directed sale subsequent to September 30, 2012 (Note 16).

Collateralized Mortgages, Notes and Loans Payable

As of September 30, 2012, $21.58 billion of land, buildings and equipment (before accumulated depreciation) and construction in progress have been pledged as collateral for our mortgages, notes and loans payable. Certain of these secured loans, representing $2.13 billion of debt, are cross-collateralized with other properties.  Although a majority of the $14.74 billion of fixed and variable rate collateralized mortgages, notes and loans payable are non-recourse, $1.56 billion of such mortgages, notes and loans payable are recourse to the Company as guarantees on secured financings.  In addition, certain mortgage loans contain other credit enhancement provisions (primarily master leases for all or a portion of the property) which have been provided by GGP.  Certain mortgages, notes and loans payable may be prepaid but are generally subject to a prepayment penalty equal to a yield-maintenance premium, defeasance or a percentage of the loan balance.

On August 3, 2012, we closed on $763.5 million secured financings of five consolidated properties with a single lender.  The loans mature between January 2019 and September 2024 and bear interest at a weighted average rate of 5.80% per annum and replace loans at these properties in the same amount with an average interest rate of 7.5%.  Proceds from the financings were used to unencumber two properties.

On June 6, 2012, we closed on a new loan for The Grand Canal Shoppes and The Shoppes at The Palazzo in the amount of $625.0 million, which bears interest at 4.24% and matures in 2019.  The new loan replaces the existing loans at The Grand Canal Shoppes which was $368.1 million, bore interest at 4.78% and was scheduled to mature in 2014 and The Shoppes at The Palazzo, which was $239.0 million, bore interest at LIBOR plus 300 basis points and was scheduled to mature in 2017.  The new loan eliminates $238.7 million of recourse to the Company and resulted in $18.7 million in excess proceeds.

On April 2, 2012, we closed the $1.40 billion secured financing of Ala Moana Center.  The loan matures in April 2022 and bears interest at 4.23% per annum. The new loan replaces the previous loan at Ala Moana, which was $1.29 billion, bore interest at 5.59% and was scheduled to mature in 2018. The transaction resulted in $110.0 million in excess proceeds.

Corporate and Other Unsecured Loans

We have certain unsecured debt obligations, the terms of which are described below.

We have publicly-traded unsecured bonds of $1.30 billion outstanding as of September 30, 2012 and $1.65 billion outstanding as of December 31, 2011.  Such bonds have maturity dates from May 2013 through November 2015 and interest rates ranging from 5.38% to 6.75%.  The bonds have covenants, including ratios of secured debt to gross assets and total debt to total gross assets. We are not aware of any instances of non-compliance with such covenants as of September 30, 2012. We repaid the $349.5 million bond on September 17, 2012, when it matured, with available cash on hand.

In April 2012, we amended our revolving credit facility (the “Facility”) providing for revolving loans of up to $1.00 billion.  The Facility is scheduled to mature in April 2016 and is guaranteed by certain of our subsidiaries and secured by (i) first lien mortgages on certain properties, (ii) first-lien pledges of equity interests in certain of our subsidiaries and (iii) various additional collateral.  No amounts have been drawn on the Facility.  Borrowings under the Facility bear interest at a rate equal to LIBOR plus 2.25%.  The Facility contains certain restrictive covenants which limit material changes in the nature of our business conducted, including but not limited to, mergers, dissolutions or liquidations, dispositions of assets, liens, incurrence of additional indebtedness, dividends, transactions with affiliates, prepayment of subordinated debt, negative pledges and changes in fiscal periods. In addition, we are required to maintain a maximum net debt to value ratio, a maximum leverage ratio and a minimum net cash interest coverage ratio; we are not aware of any instances of non-compliance with such covenants as of September 30, 2012.

We also have a note payable to HHC in the amount of $20.8 million, which bears interest at 4.41% per annum and matures in 2015.

The corporate and other unsecured loans exclude a net market rate premium of $15.2 million that increases the total amount that appears outstanding on the consolidated balance sheets.  The market rate premium amortizes as a reduction to interest expense over the life of the respective loan.

Junior Subordinated Notes

GGP Capital Trust I, a Delaware statutory trust (the “Trust”) and a wholly-owned subsidiary of GGPLP, completed a private placement of $200.0 million of trust preferred securities (“TRUPS”) in 2006.  The Trust also issued $6.2 million of Common Securities to GGPLP.  The Trust used the proceeds from the sale of the TRUPS and Common Securities to purchase $206.2 million of floating rate Junior Subordinated Notes of GGPLP due 2041.  Distributions on the TRUPS are equal to LIBOR plus 1.45%.  Distributions are cumulative and accrue from the date of original issuance.  The TRUPS mature on April 30, 2041, but may be redeemed beginning on April 30, 2011 if the Trust exercises its right to redeem a like amount of Junior Subordinated Notes.  The Junior Subordinated Notes bear interest at LIBOR plus 1.45%. Though the Trust is a wholly-owned subsidiary of GGPLP, we are not the primary beneficiary of the Trust and, accordingly, it is not consolidated for accounting purposes.  We have recorded the Junior Subordinated Notes as mortgages, notes and loans payable and our common equity interest in the Trust as prepaid expenses and other assets in our Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011.

Letters of Credit and Surety Bonds

We had outstanding letters of credit and surety bonds of $19.6 million as of September 30, 2012 and $19.1 million as of December 31, 2011. These letters of credit and bonds were issued primarily in connection with insurance requirements, special real estate assessments and construction obligations.

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INCOME TAXES

9 Months Ended

Sep. 30, 2012

INCOME TAXES

INCOME TAXES

NOTE 7        INCOME TAXES

We have elected to be taxed as a REIT under sections 850-860 of the Internal Revenue Code.  We intend to maintain REIT status. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including requirements to distribute at least 90% of our ordinary taxable income and to either distribute capital gains to stockholders, or pay corporate income tax on the undistributed capital gains. In addition, the Company is required to meet certain asset and income tests.

As a REIT, we will generally not be subject to corporate level Federal income tax on taxable income we distribute currently to our stockholders. If we fail to qualify as a REIT in any taxable year, we will be subject to Federal income taxes at regular corporate rates (including any applicable alternative minimum tax) and may not be able to qualify as a REIT for four subsequent taxable years.  Even if we qualify for taxation as a REIT, we may be subject to certain state and local taxes on our income or property, and to Federal income and excise taxes on our undistributed taxable income.  Generally, we are currently open to audit by the Internal Revenue Service for the years ending December 31, 2009 through 2011 and are open to audit by state taxing authorities for the years ending December 31, 2008 through 2011.

Based on our assessment of the expected outcome of examinations that are in process or may commence, or as a result of the expiration of the statute of limitations for specific jurisdictions, we do not expect that the related unrecognized tax benefits, excluding accrued interest, for tax positions taken regarding previously filed tax returns will materially change from those recorded at December 31, 2011 during the next twelve months.

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EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS

9 Months Ended

Sep. 30, 2012

EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS

EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS

NOTE 9        EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS

Allocation to Noncontrolling Interests

Noncontrolling interests consists of the redeemable interests related to our common and preferred Operating Partnership units and the noncontrolling interest in our consolidated joint ventures.  The following table reflects the activity included in the allocation to noncontrolling interests.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Distributions to preferred Operating Partnership units	$	(2,335	)	$	(2,336	)	$	(10,104	)	$	(6,932	)
Net loss allocation to noncontrolling interests in operating partnership from continuing operations (common units)	1,603			(1,810		)	3,753			(386		)
Net income (loss) allocated to noncontrolling interest in consolidated real estate affiliates	(547		)	(365		)	115			600
Allocation to noncontrolling interests	$	(1,279	)	$	(4,511	)	$	(6,236	)	$	(6,718	)
Other comprehensive loss (income) allocation to common units	(5		)	612			233			302
Comprehensive loss allocated to noncontrolling interests	$	(1,284	)	$	(3,899	)	$	(6,003	)	$	(6,416	)

Redeemable Noncontrolling Interests

The minority interests related to our common and preferred Operating Partnership units are presented as redeemable noncontrolling interests in our Consolidated Balance Sheets, presented at the greater of the carrying amount adjusted for the noncontrolling interest’s share of the allocation of income or loss (and its share of other comprehensive income or loss) and dividends or their fair value as of each measurement date.  The common redeemable noncontrolling interests have been presented at fair value for all periods presented.  One tranche of preferred redeemable noncontrolling interests has been presented at fair value, while the other tranches of preferred redeemable noncontrolling interests have been presented at carrying value plus allocated loss and other comprehensive income (loss)  as of September 30, 2012.  All preferred redeemable noncontrolling interest have been presented at carrying value plus allocated loss and other comprehensive income (loss) as of December 31, 2011.  The excess of the fair value over the carrying amount from period to period is recorded within additional paid-in capital in our Consolidated Balance Sheets.  Allocation to noncontrolling interests is presented as an adjustment to net income to arrive at net loss attributable to common stockholders.

Generally, the holders of the Common Units share in any distributions by the Operating Partnership with our common stockholders.  However, the Operating Partnership agreement permits distributions solely to GGP if such distributions were required to allow GGP to comply with the REIT distribution requirements or to avoid the imposition of excise tax.  Under certain circumstances, the conversion rate for each Common Unit is required to be adjusted to give effect to stock distributions.  As a result, the common stock dividends paid in 2011 modified the conversion rate to 1.0397624.  The aggregate amount of cash that would have been paid to the holders of the outstanding Common Units as of September 30, 2012 if such holders had requested redemption of the Common Units as of September 30, 2012, and all such Common Units were redeemed or purchased pursuant to the rights associated with such Common Units for cash, would have been $132.0 million.

The Operating Partnership issued Convertible Preferred Units, which are convertible, with certain restrictions, at any time by the holder into Common Units of the Operating Partnership at the rates below (subject to adjustment).  The Common Units are convertible into common stock at a one to one ratio at the current stock price.  The convertible preferred units are carried at the greater of contractual redemption value or fair value (based on current stock price).

The holders of both the preferred units and the Common Units received shares of the common stock of RPI as a result of the spin-off that occurred on January 12, 2012.

	Number of Common Units for each Preferred Unit	Number of Contractual Convertible Preferred Units Outstanding as of September 30, 2012	Converted Basis to Common Units Outstanding as of September 30, 2012	Conversion Price		Redemption Value
Series B (1)	3.0000	1,279,715	3,991,799	$	16.66670	$	77,760,248
Series D	1.5082	532,750	803,494	33.15188		26,637,337
Series E	1.2984	502,658	652,651	38.51000		25,133,590
Series C	1.0000	20,000	20,000	250.00000		5,000,000
						$	134,531,175

(1)  The conversion price of Series B preferred units is lower than the GGP September 28, 2012 closing common stock price of $19.48.  Therefore, a common stock price of $19.48 is used to calculate the Series B redemption value.

The following table reflects the activity of the redeemable noncontrolling interests for the nine months ended September 30, 2012 and 2011.

Balance at January 1, 2011	$	232,364
Net income	386
Distributions	(2,056		)
Cash redemption of operating partnership units	(4,615		)
Other comprehensive loss	(302		)
Adjustment for noncontrolling interests in Operating Partnership	(12,984		)
Balance at September 30, 2011	$	212,793
Balance at January 1, 2012	$	223,795
Net loss	(3,753		)
Distributions	(2,116		)
Cash redemption of operating partnership units	(1,134		)
Dividend for RPI Spin-off	3,137
Other comprehensive loss	(233		)
Adjustment for noncontrolling interests in Operating Partnership	46,855
Balance at September 30, 2012	$	266,551

Common Stock Dividend and Purchase of Common Stock

Our Board of Directors declared common stock dividends during 2012 as follows:

Declaration Date	Record Date	Date Payable or Paid	Dividend Per Share
August 1, 2012	October 15, 2012	October 29, 2012	0.11
May 1, 2012	July 16, 2012	July 30, 2012	0.10
February 27, 2012	April 16, 2012	April 30, 2012	0.10

On December 20, 2011, the Board of Directors approved the distribution of RPI in the form of a special dividend for which GGP shareholders were entitled to receive approximately 0.0375 shares of RPI common stock for each share of GGP common stock held as of December 30, 2011.  RPI’s net equity was recorded as of December 31, 2011 as a dividend payable as substantive conditions for the spin-off were met as of December 31, 2011 and it was probable that the spin-off would occur.  On January 12, 2012, we distributed our shares in RPI to the GGP shareholders of record as of the close of business on December 30, 2011.  As of December 31, 2011, we had recorded a distribution payable of $526.3 million and a related decrease in retained earnings (accumulated deficit), of which $426.7 million relates to the special dividend, on our Consolidated Balance Sheet.  This special dividend satisfied part of our 2011 and 2012 REIT distribution requirements.  We adjusted the distribution in retained earnings (accumulated deficit) by $26.0 million to reflect the net change in RPI’s net assets as of the date of the spin-off as compared to the balance recorded at December 31, 2011.

We implemented our Dividend Reinvestment Plan (“DRIP”) in March 2011.  The DRIP provides eligible holders of GGP’s common stock with a convenient method of increasing their investment in the Company by reinvesting all or a portion of cash dividends in additional shares of common stock.  Eligible stockholders who enroll in the DRIP on or before the fourth business day preceding the record date for a dividend payment will be able to have that dividend reinvested.  As a result of the DRIP elections, 2,866,019 shares were issued during the nine months ended September 30, 2012 and 4,846,784 shares were issued during the nine months ended September 30, 2011.

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PREPAID EXPENSES AND OTHER ASSETS (Tables)

9 Months Ended

Sep. 30, 2012

PREPAID EXPENSES AND OTHER ASSETS

Components of prepaid expenses and other assets

	September 30,		December 31,
	2012		2011
Above-market tenant leases, net (Note 3)	$	865,510	$	1,163,754
Below-market ground leases, net (Note 3)	188,146		198,230
Security and escrow deposits	152,166		247,718
Real estate tax stabilization agreement, net (Note 3)	99,561		104,295
Prepaid expenses	68,236		51,928
Other non-tenant receivables	7,697		21,198
Deferred tax, net of valuation allowances	529		4,578
Other	16,649		13,834
Total prepaid expenses and other assets	$	1,398,494	$	1,805,535

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WARRANT LIABILITY (Details 2) (USD $) In Thousands, except Per Share data, unless otherwise specified	9 Months Ended	12 Months Ended					9 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2012 Minimum	Dec. 31, 2011 Minimum	Sep. 30, 2012 Maximum	Dec. 31, 2011 Maximum	Sep. 30, 2012 Fair Value Measurements, Recurring Significant Unobservable Inputs (Level 3)	Sep. 30, 2011 Fair Value Measurements, Recurring Significant Unobservable Inputs (Level 3)
Fair Value of Warrant Liability
Balance at the beginning of the period							$ 985,962	$ 1,041,004
Warrant liability adjustment							413,081	(319,460)
Balance at the end of the period							1,399,043	721,544
Estimated fair value of Warrants and significant assumptions used in valuation
Warrant liability	$ 1,399,043	$ 985,962
Observable Inputs
GGP stock price per share	$ 19.48	$ 15.02
Warrant term	5 years 1 month 10 days	5 years 10 months 10 days
Unobservable Inputs
Expected volatility (as a percent)	30.00%	37.00%	15.00%	20.00%	70.00%	65.00%
Discount for lack of marketability (as a percent)	3.00%	3.00%	3.00%	3.00%	7.00%	7.00%

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LITIGATION

9 Months Ended

Sep. 30, 2012

LITIGATION

LITIGATION

NOTE 14LITIGATION

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 effect on our consolidated financial position, results of operations or liquidity.

Default Interest

Pursuant to the Plan, the Company cured and reinstated that certain note (the “Homart Note”) in the original principal amount of $254.0 million between GGP Limited Partnership and The Comptroller of the State of New York as Trustee of the Common Retirement Fund (“CRF”) by payment in cash of accrued interest at the contractual non-default rate.   CRF, however, contended that the Company’s bankruptcy caused the Company to default under the Homart Note and, therefore, post-petition interest accrued under the Homart Note at the contractual default rate was due for the period June 1, 2009 until November 9, 2010.  On June 16, 2011, the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) ruled in favor of CRF, and, on June 22, 2011, the Company elected to satisfy the Homart Note in full by paying CRF the outstanding default interest and principal amount on the Homart Note totaling $246.0 million.  As a result of the ruling, the Company incurred and paid $11.7 million of default interest expense during the year ended December 31, 2011. However, the Company has appealed the Bankruptcy Court’s order and has reserved its right to recover the payment of default interest.

Pursuant to the Plan, the Company agreed to pay to the holders of claims (the “2006 Lenders”) under a revolving and term loan facility (the “2006 Credit Facility”) the principal amount of their claims outstanding of approximately $2.58 billion plus post-petition interest at the contractual non-default rate. However, the 2006 Lenders asserted that they were entitled to receive interest at the contractual default rate.  In July 2011, the Bankruptcy Court ruled in favor of the 2006 Lenders, and in August 2011, the Company appealed the order. As a result of the ruling, the Company has accrued $94.9 million as of September 30, 2012 and $91.5 million as of December 31, 2011. We will continue to evaluate the appropriateness of our accrual during the appeal process.

Tax Indemnification Liability

Pursuant to the Investment Agreements, the Successor has indemnified HHC from and against 93.75% of any and all losses, claims, damages, liabilities and reasonable expenses to which HHC and its subsidiaries become subject, in each case solely to the extent directly attributable to MPC Taxes (as defined in the Investment Agreements) in an amount up to $303.8 million.  Under certain circumstances, we agreed to be responsible for interest or penalties attributable to such MPC Taxes in excess of the $303.8 million.  As a result of this indemnity, The Howard Hughes Company, LLC and Howard Hughes Properties, Inc. filed petitions in the United States Tax Court on May 6, 2011, contesting this liability.  Trial is expected in November 2012; however, a decision is not expected until late 2013.We have accrued $303.8 million as of September 30, 2012 and December 31, 2011 related to the tax indemnification liability. In addition, we have accrued $21.6 million of interest related to the tax indemnification liability in accounts payable and accrued expenses on our Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011.  The aggregate liability of $325.4 million represents management’s best estimate of our liability as of September 30, 2012, which will be periodically evaluated in the aggregate.  We do not expect to make any significant payments on the tax indemnification liability within the next 12 months.

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ACQUISITIONS AND INTANGIBLES (Tables)

9 Months Ended

Sep. 30, 2012

ACQUISITIONS AND INTANGIBLES

Schedule of gain calculation

Total fair value of net assets acquired	$	200,271
Previous investment in the Oaks and Westroads	(83,415		)
Cash paid to acquire our joint venture partner’s interest	(98,309		)
Gain from change in control of investment properties	$	18,547

Schedule of allocation of purchase price to net assets acquired at the date of acquisition

Investment in real estate	$	402,197
Above-market lease intangibles	15,746
Below-market lease intangibles	(29,393		)
Fair value of mortgages, notes and loans payable	(197,927		)
Net working capital	9,648
Net assets acquired	$	200,271

Schedule of intangible assets and liabilities

	Gross Asset (Liability)			Accumulated (Amortization)/ Accretion			Net Carrying Amount
As of September 30, 2012
Tenant leases:
In-place value	$	1,005,505		$	(394,853	)	$	610,652
Above-market	1,244,135			(378,625		)	865,510
Below-market	(740,840		)	228,555			(512,285		)
Building leases:
Above-market	(15,268		)	2,969			(12,299		)
Ground leases:
Above-market	(9,756		)	711			(9,045		)
Below-market	196,824			(8,678		)	188,146
Real estate tax stabilization agreement	111,506			(11,945		)	99,561
As of December 31, 2011
Tenant leases:
In-place value	$	1,252,484		$	(391,605	)	$	860,879
Above-market	1,478,798			(315,044		)	1,163,754
Below-market	(819,056		)	184,254			(634,802		)
Building leases:
Above-market	(15,268		)	1,697			(13,571		)
Ground leases:
Above-market	(9,839		)	439			(9,400		)
Below-market	204,432			(6,202		)	198,230
Real estate tax stabilization agreement	111,506			(7,211		)	104,295

Schedule of amortization/accretion of these intangible assets and liabilities on net loss from continuing operations

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Amortization/accretion effect on continuing operations	$	(88,769	)	$	(125,541	)	$	(276,521	)	$	(362,723	)

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INCOME TAXES (Details)	9 Months Ended
	Sep. 30, 2012
INCOME TAXES
Required minimum percentage distribution of ordinary taxable income to stockholders to qualify as a REIT	90.00%
Period of disqualification of REIT status	4 years

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
Carrying Amount
Fixed-rate debt	$ 14,246,457	$ 14,795,370
Variable-rate debt	1,827,558	2,347,644
Total mortgages, notes and loans payable	16,074,015	17,143,014
Estimated Fair Value
Fixed-rate debt	15,338,267	14,978,908
Variable-rate debt	1,724,031	2,326,533
Total long-term debt, fair value	$ 17,062,298	$ 17,305,441
Variable rate basis	LIBOR

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CONSOLIDATED STATEMENTS OF EQUITY (USD $) In Thousands, unless otherwise specified	Total	Common Stock	Additional Paid-In Capital	Retained Earnings (Accumulated Deficit)	Accumulated Other Comprehensive Income (Loss)	Noncontrolling Interests in Consolidated Real Estate Affiliates
Balance at Dec. 31, 2010	$ 10,181,749	$ 9,419	$ 10,681,586	$ (612,075)	$ 172	$ 102,647
Increase (Decrease) in Shareholders' Equity
Net income (loss)	54,066			54,666		(600)
Distributions to noncontrolling interests in consolidated Real Estate Affiliates	(4,759)					(4,759)
Issuance of common stock - payment of dividend (22,256,121 common shares)		223	(244)	21
Restricted stock grant, net of forfeitures and compensation expense (48,125) and (282,320) common shares for the nine months ended September 30, 2012 and 2011, respectively)	8,590	(3)	8,593
Stock options exercised (396,064 and 97,987 common shares for the nine months ended September 30, 2012 and 2011, respectively)	489	1	488
Purchase and cancellation of common shares ((34,906,069 common shares)	(543,015)	(349)	(388,445)	(154,221)
Cash dividends reinvested (DRIP) in stock (2,866,019 and 4,846,784 common shares for the nine months ended September 30, 2012 and 2011, respectively)	80,708	48	80,660
Other comprehensive loss	(42,757)				(42,757)
Cash distributions declared ($0.31 and $0.30 per share) for the nine months ended September 30,2012 and 2011, respectively)	(283,313)		(16)	(283,297)
Cash redemptions for common units in excess of carrying value	(648)		(648)
Adjustment for noncontrolling interest in operating partnership	12,984		12,984
Balance at Sep. 30, 2011	9,464,094	9,339	10,394,958	(994,906)	(42,585)	97,288
Balance at Dec. 31, 2011	8,579,345	9,353	10,405,318	(1,883,569)	(47,773)	96,016
Increase (Decrease) in Shareholders' Equity
Net income (loss)	(513,552)			(513,437)		(115)
Distributions to noncontrolling interests in consolidated Real Estate Affiliates	(7,035)					(7,035)
Restricted stock grant, net of forfeitures and compensation expense (48,125) and (282,320) common shares for the nine months ended September 30, 2012 and 2011, respectively)	6,632		6,632
Employee stock purchase program (98,076 common shares)	1,605	1	1,604
Stock options exercised (396,064 and 97,987 common shares for the nine months ended September 30, 2012 and 2011, respectively)	7,561	4	7,557
Cash dividends reinvested (DRIP) in stock (2,866,019 and 4,846,784 common shares for the nine months ended September 30, 2012 and 2011, respectively)	43,839	29	43,810
Other comprehensive loss	(34,253)				(34,253)
Cash distributions declared ($0.31 and $0.30 per share) for the nine months ended September 30,2012 and 2011, respectively)	(290,797)			(290,797)
Cash redemptions for common units in excess of carrying value	(409)		(409)
Adjustment for noncontrolling interest in operating partnership	(46,855)		(46,855)
Adjustment to dividend for RPI Spin-Off	26,044			26,044
Balance at Sep. 30, 2012	$ 7,772,125	$ 9,387	$ 10,417,657	$ (2,661,759)	$ (82,026)	$ 88,866

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ACQUISITIONS AND INTANGIBLES

9 Months Ended

Sep. 30, 2012

ACQUISITIONS AND INTANGIBLES

ACQUISITIONS AND INTANGIBLES

NOTE 3        ACQUISITIONS AND INTANGIBLES

Acquisitions

During the nine months ended September 30, 2012, we acquired five anchor boxes, excluding the Sears anchor pads discussed below, for an aggregate purchase price of $26.3 million.

In addition, on April 17, 2012, we acquired 11 Sears anchor pads (including fee interests in five anchor pads and long-term leasehold interests in six anchor pads) for the purpose of redevelopment or remerchandising.  Total consideration paid was $270.0 million. The purchase price of $212.0 million for the leasehold interests was recorded in construction in progress, as the buy-out costs were necessary costs related to redevelopment projects at these properties, and the purchase price of $58.0 million for the fee interests was recorded in land and building in our Consolidated Balance Sheets as of September 30, 2012.

Also, on April 5, 2012, we acquired the remaining 49% interest in the Oaks and Westroads, previously owned through a joint venture, for $191.1 million which included the assumption the remaining 49% of debt of $92.8 million and $98.3 million of cash.  The properties were previously recorded under the equity method of accounting and are now consolidated.  The acquisition resulted in a remeasurement of the net assets acquired to fair value.  We recorded a gain from the change in control, since the fair value of the net assets acquired was greater than our investment in the joint venture and the cash paid.  This gain is reported in our Consolidated Statements of Operations and Comprehensive Income (Loss).  The table below summarizes the gain calculation:

Total fair value of net assets acquired	$	200,271
Previous investment in the Oaks and Westroads	(83,415		)
Cash paid to acquire our joint venture partner’s interest	(98,309		)
Gain from change in control of investment properties	$	18,547

The following table summarizes the allocation of the purchase price to the net assets acquired at the date of acquisition.  These allocations were based on the relative fair values of the assets acquired and liabilities assumed.

Investment in real estate	$	402,197
Above-market lease intangibles	15,746
Below-market lease intangibles	(29,393		)
Fair value of mortgages, notes and loans payable	(197,927		)
Net working capital	9,648
Net assets acquired	$	200,271

Intangible Assets and Liabilities

The following table summarizes our intangible assets and liabilities:

	Gross Asset (Liability)			Accumulated (Amortization)/ Accretion			Net Carrying Amount
As of September 30, 2012
Tenant leases:
In-place value	$	1,005,505		$	(394,853	)	$	610,652
Above-market	1,244,135			(378,625		)	865,510
Below-market	(740,840		)	228,555			(512,285		)
Building leases:
Above-market	(15,268		)	2,969			(12,299		)
Ground leases:
Above-market	(9,756		)	711			(9,045		)
Below-market	196,824			(8,678		)	188,146
Real estate tax stabilization agreement	111,506			(11,945		)	99,561
As of December 31, 2011
Tenant leases:
In-place value	$	1,252,484		$	(391,605	)	$	860,879
Above-market	1,478,798			(315,044		)	1,163,754
Below-market	(819,056		)	184,254			(634,802		)
Building leases:
Above-market	(15,268		)	1,697			(13,571		)
Ground leases:
Above-market	(9,839		)	439			(9,400		)
Below-market	204,432			(6,202		)	198,230
Real estate tax stabilization agreement	111,506			(7,211		)	104,295

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 tenant leases and below-market ground leases are included in prepaid expenses and other assets (Note 12); the below-market tenant leases, above-market ground leases and above-market building lease are included in accounts payable and accrued expenses (Note 13) in our Consolidated Balance Sheets.

Amortization/accretion of these intangibles had the following effects on our loss from continuing operations:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Amortization/accretion effect on continuing operations	$	(88,769	)	$	(125,541	)	$	(276,521	)	$	(362,723	)

Future amortization/accretion of these intangibles is estimated to decrease results from continuing operations by approximately $74.4 million for the remainder of 2012, $247.5 million in 2013, $199.9 million in 2014, $162.1 million in 2015 and $128.1 million in 2016.

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LITIGATION (Details) (USD $)	3 Months Ended		9 Months Ended	12 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2012 HHC	Dec. 31, 2011 Homart Note	Jun. 22, 2011 Homart Note	Sep. 30, 2012 2006 Credit Facility	Dec. 31, 2011 2006 Credit Facility
Default Interest
Principal amount outstanding				$ 254,000,000			$ 2,580,000,000
Outstanding default interest and principal amount					246,000,000
Default interest expense				11,700,000
Default interest accrued						94,900,000	91,500,000
Tax Indemnification Liability
Successor indemnified percentage of losses of HHC and its subsidiaries			93.75%
Maximum amount indemnified, solely to the extent directly attributable to MPC Taxes			303,800,000
Tax indemnification liability	303,750,000	303,750,000
Accrued interest related to tax indemnification liability	21,600,000	21,600,000
Management's best estimate of aggregate liability	$ 325,400,000
Period during which the entity does not expect to make any payments on tax indemnification liability	12 months

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DISPOSITIONS, DISCONTINUED OPERATIONS AND GAINS (LOSSES) ON DISPOSITIONS OF INTERESTS IN OPERATING PROPERTIES (Tables)

9 Months Ended

Sep. 30, 2012

DISPOSITIONS, DISCONTINUED OPERATIONS AND GAINS (LOSSES) ON DISPOSITIONS OF INTERESTS IN OPERATING PROPERTIES

Summary of operations of the properties included in discontinued operations

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
	(In thousands)
Retail and other revenue	$	4,858		$	82,258		$	38,620		$	260,156
Retail and other operating expenses	3,933			69,023			23,440			206,264
Provisions for impairment	—			—			10,393			51
Total expenses	3,933			69,023			33,833			206,315
Operating income	925			13,235			4,787			53,841
Interest expense, net	(561		)	(19,628		)	(6,819		)	(68,705		)
Net income (loss) from operations	364			(6,393		)	(2,032		)	(14,864		)
Provision for income taxes	—			(158		)	(23		)	(500		)
Allocation to noncontrolling interest	—			(93		)	—			(146		)
Gain on dispositions	13,212			2,368			13,037			1,822
Net income (loss) from discontinued operations	$	13,576		$	(4,276	)	$	10,982		$	(13,688	)

* Includes a net gain on debt extinguishment of $9.9 million during the nine months ended September 30, 2012.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)	3 Months Ended
	Mar. 31, 2012 property
Reclassifications
Number of properties previously classified as held for sale, reclassified as held for use	4
Number of properties previously classified as held for sale, reclassified as held for use, continuing operations	3

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ACCOUNTS PAYABLE AND ACCRUED EXPENSES

9 Months Ended

Sep. 30, 2012

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

NOTE 13ACCOUNTS PAYABLE AND ACCRUED EXPENSES

The following table summarizes the significant components of accounts payable and accrued expenses.

	September 30,		December 31,
	2012		2011
Below-market tenant leases, net (Note 3)	$	512,285	$	634,802
Accrued interest	208,008		196,536
Accounts payable and accrued expenses	139,523		164,139
Accrued real estate taxes	95,466		77,722
Deferred gains/income	78,612		65,174
Accrued payroll and other employee liabilities	70,045		77,231
Construction payable	59,094		69,291
Tenant and other deposits	22,937		19,336
Insurance reserve liability	15,866		17,796
Capital lease obligations	12,605		12,774
Above-market headquarter office leases, net (Note 3)	12,299		13,571
Conditional asset retirement obligation liability	12,345		16,596
Above-market ground leases, net (Note 3)	9,045		9,400
Uncertain tax position liability	5,873		6,847
Other	17,361		64,523
Total accounts payable and accrued expenses	$	1,271,364	$	1,445,738