The Bucks Rebound Begins Here Pershing Square Capital Management, - PDF document

The Buck’s Rebound Begins Here Pershing Square Capital Management, L.P. May 27, 2009

Disclaimer The analysis and conclusions of Pershing Square Capital Management, L.P. ("Pershing Square") regarding General Growth Properties, Inc. and its affiliates (collectively, “GGP” or the “Company”) are based on publicly available information. Pershing Square recognizes that there may be confidential or otherwise non-public information in the possession of the Company that could lead the Company to disagree with Pershing Square’s conclusions. The analyses provided include certain estimates and projections prepared with respect to, among other things, the historical and anticipated operating performance of the Company. Such statements, estimates, and projections reflect various assumptions by Pershing Square concerning anticipated results that are inherently subject to significant economic, competitive, and other uncertainties and contingencies and have been included solely for illustrative purposes. No representations, express or implied, are made as to the accuracy or completeness of such statements, estimates or projections or with respect to any other materials herein. Actual results may vary materially from the estimates and projected results contained herein. Pershing Square advises funds that are in the business of trading - buying and selling - public securities. Pershing Square owns GGP equity, total return swaps, and GGP unsecured debt. It is possible that there will be developments in the future that cause such funds to change their positions regarding the Company and possibly increase, reduce, dispose of, or change the form of their investment in the Company. 1

Agenda � Why We Like General Growth Properties � A Brief History � Not Your Typical Bankruptcy � GGP’s Assets Are Greater Than Its Liabilities 2

Why Do We Like GGP? Ala Moana

What is GGP? GGP REIT GGMI MPC Includes Retail & Office Properties General Growth Management Inc. Master Planned Communities ■ Over 200 regional malls ■ Provides management, ■ Develops and sells land (>160mm sq ft) (1) / leasing and marketing for residential and outdoor shopping centers services commercial use ■ Over 30 grocery-anchored ■ Over 60% of revenue ■ Land located near shopping centers derived from third party Maryland / Washington (non-GGP) malls D.C., Summerlin, NV and ■ Office properties in Arizona, Houston, TX Nevada and near Maryland / ■ Manages many of GGP’s Washington D.C. JV malls ■ ~18,000 saleable acres ■ 1.3bn mall visits per year ■ >24,000 tenants ■ >3,700 employees (2) ________________________________________________ (1) Includes anchor GLA and the Company’s pro rata share of JV malls. 4 (2) >400,000 employees including retail tenants.

Diverse Footprint GGP is geographically well-diversified with malls in 44 states. The Company also has interests in joint ventures in Brazil and Turkey 5

Diverse Tenant Base GGP has over 24,000 tenants, with its largest tenant accounting for only 2.7% of revenue as of March 31, 2009 Memo: Market Cap $11.8bn 4.0bn 2.4bn 1.8bn 5.0bn 3.0bn Private Private Private 6.0bn ________________________________________________ Source: GGP Q1’09 operating supplement. 6

High Quality Assets Green Street assigns an ‘A’ grade to 73 malls in GGP’s portfolio Not Included Other Examples: � Faneuil Hall Marketplace � South Street Seaport � Ward Centers (Honolulu, HI) ________________________________________________ Source: Green Street. GGP’s portfolio consists of many of the best malls in America 7

High Quality Assets (Cont’d) “Indicative of the strength within our portfolio is the performance of our 50 most productive United States centers. These properties generated average sales per square foot of approximately $648. Not only do these 50 centers produce tremendous sales per square foot, they also represent approximately 50% of our total mall NOI. This is one more example of the quality of our portfolio, and quality will be more important than ever as we move forward in 2008 and 2009.” – John Bucksbaum, Chairman and Former CEO, July 31, 2008 Because the NOI from GGP’s highest quality malls should be valued at materially lower cap rates than its lower quality malls, a substantial majority of GGP’s equity value is in the Company’s best assets 8

Why We Like Malls Relative to other real estate asset classes, malls have historically generated the most stable cash flow Weighted-Average Same-Store NOI Grow th Across Various Property Types 8.0% 6.0% Apartment 4.0% Office Industrial 2.0% Mall 0.0% (2.0%) (4.0%) (6.0%) 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E 2009E 2010E 2011E 2012E 2013E 9 ________________________________________________ Source: Green Street. Sector data represents weighted average of companies in coverage universe during the period in question.

Long Term Leases GGP’s business is far less cyclical than that of the retail industry because its revenues are insulated by long-term leases which are structurally senior claims GGP Lease Expiration Schedule (1) More than 75% of GGP’s leases do 20.0% not expire until 18.0% 2012 or later 16.0% 14.0% 11.7% 12.0% 10.2% 10.1% 9.9% 9.7% 10.0% 9.0% 8.8% 8.4% 8.2% 8.1% 8.0% 5.9% 6.0% 4.0% 2.0% 0.0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 After Rent & Recov. $36.83 $41.07 $47.78 $53.07 $56.24 $56.04 $64.70 $67.47 $70.16 $74.81 $61.75 Per Sq Ft ________________________________________________ Source: GGP Q1’09 operating supplement. Expiration includes Company’s pro rata share of its unconsolidated segment. (1) Excludes leases on anchors of 30,000 square feet or more and tenants paying percentage rent in lieu of base minimum rent. Excludes all international operations which combined represent ~1% of segment basis real estate property NOI. Also excludes community centers. Percentage is weighted based on rent per square foot. 10 .

Embedded Grow th GGP’s long term lease-based revenue model offers embedded growth in good times and mitigates revenue declines in bad times GGP Rent & Recoverable Per Sq Ft Expiration Schedule (1) $75 $75.00 $70 $70.00 $67 $65 $65.00 $62 Average: $60.00 $56 $56 $56 $55.00 $53 $50.00 $48 Embedded Growth $45.00 Opportunity $41 $40.00 $37 $35.00 $30.00 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 After ________________________________________________ Source: GGP Q1’09 operating supplement. Expirations include company’s pro rata share of its unconsolidated segment. (1) Data includes significant proportion of short-term leases on inline spaces that are leased for one year. Rents and recoverable common area costs related to these short-term leases are typically much lower than those related to long-term leases. Any inferences the reader may draw regarding future rent spreads should be made in light of this difference between shrort- and long-term leases. . 11 11

Approximately 82% of GGP’s debt is fixed rate 12 12 Inflation-Protected ________________________________________________ Source: Q1’09 operating supplement.

Why Do We Like GGP? High Quality Assets Diversified Geographical Footprint High Quality Inflation-Protected Stable Cash Flows Business Diverse Tenant Mix Embedded Growth Opportunity 13 13

A Brief History Town and Country Center Cedar Rapids, 1954

The Rise of GGP: 1954 – 2007 During its time as a 1954: April-2007: Brothers Martin & GGP achieves Public Company Matthew Bucksbaum a market cap � GGP paid ~$4bn in dividends found GGP and open of ~$20bn $70 Town & Country � GGP refinanced or paid down Shopping Center in ~$32bn of debt Cedar Rapids, IA $60 � Until Q1’09, GGP never defaulted on a mortgage $50 August-2004: Rouse acquisition 1960: GGP opens Duck $40 Creek Plaza, one April-1993: of the first malls to GGP goes public have a department on the NYSE $30 store anchor resulting in net cash proceeds of ~$383mm $20 $10 $0 1993 1995 2001 2003 2005 1954 1960 1997 1999 2007 15

The Fall of GGP: 2008 – Current March 28, 2008: GGP raises $822mm in a stock offering priced at $36 per share, implying a market cap of ~$12bn. ~$100mm is purchased by an $50 affiliate of the Bucksbaum family September 15, 2008: $40 Lehman Brothers declares bankruptcy. Market cap: ~$9bn $30 June-July, 2008: $20 April 16, 2008: The CMBS new GGP voluntarily issuance market November 28, 2008: files for bankruptcy grinds to a halt $900mm of GGP debt comes due $10 November 12, 2008: GGP market cap hits ~$100mm $0 Jan-08 Apr-08 Jul-08 Oct-08 Feb-09 May-09 16

The Problem Over the past decade, GGP was a significant issuer of CMBS with ~$15bn of CMBS debt. In mid-2008, the CMBS market shut down U.S. CMBS New Issuance Market ($ in billions) $250 $230 No market exists $203 for refinancing $200 GGP’s ~$15bn of CMBS debt $169 $150 $93 $100 $78 $74 $67 $57 $51 $47 $50 $16 $0 $0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 ________________________________________________ Source: Bank of America equity research. 17

The Problem (Cont’d) GGP’s bankruptcy is the result of the unprecedented disruption in the credit markets coinciding with large near-term debt maturities ________________________________________________ Source: GGP Q1’09 operating supplement. 18