##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended March 31, 2006
 or
 o
    
    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to
 Commission file number 1-11656
 GENERAL GROWTH PROPERTIES, INC.
  Delaware
    
    42-1283895(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification Number)
  
   
   
   þ o
  þ o o
  o þ




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##### 



GENERAL GROWTH PROPERTIES, INC.
 INDEX
 PAGENUMBERPart I FINANCIAL INFORMATIONItem 1: Financial Statements (Unaudited)Consolidated Balance Sheets
as of March 31, 2006 and December 31, 2005
    
    
    3Consolidated Statements of Income and Comprehensive Income
for the three months ended March 31, 2006 and 2005
    
    
    4Consolidated Statements of Cash Flows
for the three months ended March 31, 2006 and 2005
    
    
    5Notes
to Consolidated Financial Statements
    
    
    6Item 2: Managements Discussion and Analysis of
Financial Condition and Results of Operations
    
    
    24Liquidity and Capital Resources
    
    
    30Item 3: Quantitative and Qualitative Disclosures about Market Risk
    
    
    37Item 4: Controls and Procedures
    
    
    38Part II OTHER INFORMATIONItem 1: Legal Proceedings
    
    
    39Item 2: Unregistered Sales of Securities and Use of Proceeds
    
    
    39Item 3: Defaults Upon Senior Securities
    
    
    39Item 4: Submission of Matters to a Vote of Security Holders
    
    
    39Item 5: Other Information
    
    
    39Item 6: Exhibits
    
    
    39SIGNATURE
    
    
    41Exhibit
Index
    
    
    42Indemnity AgreementForm of Restricted Stock AwardCertification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 GENERAL GROWTH PROPERTIES, INC.
 
 CONSOLIDATED BALANCE SHEETS
 (Dollars in thousands)
 March 31,
    
    
    December 31,2006
    
    
    2005(Unaudited)AssetsInvestment in real estate:Land
    
    $
    2,823,824
    
    
    $
    2,826,766Buildings and equipment
    
    
    18,797,590
    
    
    
    18,739,445Less accumulated depreciation
    
    
    (2,262,698
    )
    
    
    (2,104,956
    )Developments in progress
    
    
    406,734
    
    
    
    366,262Net property and equipment
    
    
    19,765,450
    
    
    
    19,827,517Investment in and loans to/from Unconsolidated Real Estate Affiliates
    
    
    1,785,286
    
    
    
    1,818,097Investment land and land held for development and sale
    
    
    1,644,734
    
    
    
    1,651,063Net investment in real estate
    
    
    23,195,470
    
    
    
    23,296,677Cash and cash equivalents
    
    
    65,233
    
    
    
    102,791Accounts and notes receivable, net
    
    
    278,569
    
    
    
    293,351Insurance recovery receivable
    
    
    58,822
    
    
    
    63,382Goodwill
    
    
    361,897
    
    
    
    420,624Deferred expenses, net
    
    
    241,284
    
    
    
    209,825Prepaid expenses and other assets
    
    
    961,429
    
    
    
    920,369Total assets
    
    $
    25,162,704
    
    
    $
    25,307,019Liabilities and Stockholders EquityMortgage notes and other debt payable
    
    $
    20,448,048
    
    
    $
    20,418,875Deferred tax liabilities
    
    
    1,252,814
    
    
    
    1,286,576Accounts payable and accrued expenses
    
    
    925,675
    
    
    
    1,032,414Total liabilities
    
    
    22,626,537
    
    
    
    22,737,865Minority interests:Preferred
    
    
    202,110
    
    
    
    205,944Common
    
    
    420,537
    
    
    
    430,292Total minority interests
    
    
    622,647
    
    
    
    636,236Commitments and contingencies
    
    
    
    
    
    
    Preferred stock: $100 par value; 5,000,000 shares authorized; none
issued and outstanding
    
    
    
    
    
    
    Stockholders equity:Common stock: $.01 par value; 875,000,000 shares authorized;
241,015,206 and 239,865,045 shares issued and outstanding
as of March 31, 2006 and December 31, 2005, respectively
    
    
    2,410
    
    
    
    2,399Additional paid-in capital
    
    
    2,492,481
    
    
    
    2,469,262Retained earnings (accumulated deficit)
    
    
    (593,676
    )
    
    
    (518,555
    )Unearned compensation-restricted stock
    
    
    (2,521
    )
    
    
    (280
    )Accumulated other comprehensive income
    
    
    14,826
    
    
    
    10,454Less common stock in treasury, no shares at March 31, 2006
and 668,396 shares at December 31, 2005, at cost
    
    
    
    
    
    
    (30,362
    )Total stockholders equity
    
    
    1,913,520
    
    
    
    1,932,918Total liabilities and stockholders equity
    
    $
    25,162,704
    
    
    $
    25,307,019
  3




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GENERAL GROWTH PROPERTIES, INC.
 
 CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
 (UNAUDITED)

(Dollars in thousands, except for per share amounts)
 Three Months EndedMarch 31,2006
    
    
    2005Revenues:Minimum rents
    
    $
    437,731
    
    
    $
    405,834Tenant recoveries
    
    
    185,442
    
    
    
    185,057Overage rents
    
    
    14,227
    
    
    
    13,607Land sales
    
    
    137,220
    
    
    
    61,250Management and other fees
    
    
    28,713
    
    
    
    18,356Other
    
    
    25,286
    
    
    
    22,353Total revenues
    
    
    828,619
    
    
    
    706,457Expenses:Real estate taxes
    
    
    54,964
    
    
    
    53,190Repairs and maintenance
    
    
    47,054
    
    
    
    48,435Marketing
    
    
    12,030
    
    
    
    13,952Other property operating costs
    
    
    86,833
    
    
    
    92,937Land sales operations
    
    
    98,598
    
    
    
    53,811Provision for doubtful accounts
    
    
    6,213
    
    
    
    4,197Property management and other costs
    
    
    46,707
    
    
    
    34,964General and administrative
    
    
    3,558
    
    
    
    2,811Depreciation and amortization
    
    
    165,346
    
    
    
    161,725Total expenses
    
    
    521,303
    
    
    
    466,022Operating income
    
    
    307,316
    
    
    
    240,435Interest income
    
    
    3,222
    
    
    
    1,040Interest expense
    
    
    (278,794
    )
    
    
    (245,274
    )Income (loss) before income taxes and allocations to minority
interests and from unconsolidated affiliates
    
    
    31,744
    
    
    
    (3,799
    )Benefit (provision) for income taxes
    
    
    (25,974
    )
    
    
    1,307Income allocated to minority interests
    
    
    (11,224
    )
    
    
    (12,664
    )Equity in income of unconsolidated affiliates
    
    
    28,468
    
    
    
    26,691Income from continuing operations
    
    
    23,014
    
    
    
    11,535Income from discontinued operations, net of minority interests
    
    
    
    
    
    
    1,530Net income available to common stockholders
    
    $
    23,014
    
    
    $
    13,065Basic Earnings Per Share:Continuing operations
    
    $
    0.10
    
    
    $
    0.05Discontinued operations
    
    
    
    
    
    
    0.01Total basic earnings per share
    
    $
    0.10
    
    
    $
    0.06Diluted Earnings Per Share:Continuing operations
    
    $
    0.10
    
    
    $
    0.05Discontinued operations
    
    
    
    
    
    
    0.01Total diluted earnings per share
    
    $
    0.10
    
    
    $
    0.06Dividends
declared per share
    
    $
    0.41
    
    
    $
    0.36Comprehensive Income, Net:Net income
    
    $
    23,014
    
    
    $
    13,065Other comprehensive income, net of minority interest:Net unrealized gains on financial instruments
    
    
    1,286
    
    
    
    6,127Minimum pension liability adjustment
    
    
    (59
    )
    
    
    (107
    )Foreign currency translation
    
    
    3,052
    
    
    
    (44
    )Unrealized gains on available-for-sale securities
    
    
    93
    
    
    
    290Total other comprehensive income, net of minority interest
    
    
    4,372
    
    
    
    6,266Comprehensive income, net
    
    $
    27,386
    
    
    $
    19,331
  4




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GENERAL GROWTH PROPERTIES, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (UNAUDITED)

(Dollars in thousands)
 Three Months EndedMarch 31,2006
    
    
    2005Cash flows from operating activities:Net Income
    
    $
    23,014
    
    
    $
    13,065Adjustments to reconcile net income to net cash
provided by operating activities:Minority interests, including discontinued operations
    
    
    11,224
    
    
    
    12,856Equity in income of unconsolidated affiliates
    
    
    (28,468
    )
    
    
    (26,460
    )Provision for doubtful accounts, including discontinued operations
    
    
    6,213
    
    
    
    4,254Distributions received from unconsolidated affiliates
    
    
    26,604
    
    
    
    8,585Depreciation, including discontinued operations
    
    
    159,284
    
    
    
    158,544Amortization, including discontinued operations
    
    
    8,769
    
    
    
    6,757Amortization of debt market rate adjustment
    
    
    (7,939
    )
    
    
    (8,335
    )Participation expense pursuant to Contingent Stock Agreement
    
    
    38,480
    
    
    
    20,214Land development and acquisition expenditures
    
    
    (47,099
    )
    
    
    (25,347
    )Cost of land sales
    
    
    53,428
    
    
    
    28,507Debt assumed by purchasers of land
    
    
    (4,336
    )
    
    
    (1,118
    )Deferred income taxes
    
    
    23,562
    
    
    
    6,033Proceeds from the sale of marketable securities, including defined contribution
plan assets
    
    
    3,107
    
    
    
    4,574Straight-line rent amortization
    
    
    (12,530
    )
    
    
    (15,023
    )Above and below market lease amortization
    
    
    (9,104
    )
    
    
    (7,726
    )Other intangible amortization
    
    
    2,563
    
    
    
    2,968Net changes:Accounts and notes receivable
    
    
    17,006
    
    
    
    2,112Prepaid expenses and other assets
    
    
    10,666
    
    
    
    (18,137
    )Deferred expenses
    
    
    (15,003
    )
    
    
    (9,435
    )Accounts payable and accrued expenses
    
    
    (68,587
    )
    
    
    (33,486
    )Other, net
    
    
    5,142
    
    
    
    1,165Net cash provided by operating activities
    
    
    195,996
    
    
    
    124,567Cash flows from investing activities:Acquisition/development of real estate and property additions/improvements
    
    
    (176,538
    )
    
    
    (118,908
    )Proceeds from sale of investment property
    
    
    6,208
    
    
    
    Increase in investments in unconsolidated affiliates
    
    
    (34,677
    )
    
    
    (8,717
    )Increase (decrease) in restricted cash
    
    
    (5,208
    )
    
    
    3,798Insurance recoveries
    
    
    7,500
    
    
    
    Distributions received from unconsolidated affiliates in excess of income
    
    
    88,849
    
    
    
    13,345Loans to unconsolidated affiliates, net
    
    
    (23,574
    )
    
    
    Other, net
    
    
    4,855
    
    
    
    7,113Net cash used in investing activities
    
    
    (132,585
    )
    
    
    (103,369
    )Cash flows from financing activities:Cash distributions paid to common stockholders
    
    
    (98,133
    )
    
    
    (84,505
    )Cash distributions paid to holders of Common Units
    
    
    (21,760
    )
    
    
    (20,085
    )Cash distributions paid to holders of perpetual and convertible preferred units
    
    
    (4,408
    )
    
    
    (8,544
    )Proceeds from issuance of common stock, including from common stock plans
    
    
    9,158
    
    
    
    27,729Proceeds from issuance of mortgage notes and other property debt payable
    
    
    5,821,200
    
    
    
    1,238,147Principal payments on mortgage notes and other property debt payable
    
    
    (5,778,800
    )
    
    
    (1,163,255
    )Deferred finance costs
    
    
    (30,057
    )
    
    
    (1,524
    )Other, net
    
    
    1,831
    
    
    
    393Net cash used in financing activities
    
    
    (100,969
    )
    
    
    (11,644
    )Net change in cash and cash equivalents
    
    
    (37,558
    )
    
    
    9,554Cash and cash equivalents at beginning of period
    
    
    102,791
    
    
    
    39,581Cash and cash equivalents at end of period
    
    $
    65,233
    
    
    $
    49,135Supplemental disclosure of cash flow information:Interest paid
    
    $
    290,508
    
    
    $
    265,378Interest capitalized
    
    
    11,094
    
    
    
    14,954Taxes paid
    
    
    4,315
    
    
    
    3,898Non-cash investing and financing activities:Common stock issued in exchange for Operating Partnership Units
    
    $
    2,614
    
    
    $
    18,661Common stock issued in exchange for convertible preferred units
    
    
    3,833
    
    
    
    1,006Common stock issued pursuant to Contingent Stock Agreement
    
    
    35,349
    
    
    
    18,098
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GENERAL GROWTH PROPERTIES, INC.
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 NOTE 1 ORGANIZATION
  General
   82
    %
    
    General Growth, as sole general partner16
    
    
    Limited partners that indirectly include family members of the original stockholders
of the Company. Represented by common units of limited partnership interest (the Common Units)2
    

    
    Limited partners that include subsequent contributors of properties to the Operating Partnership
which are also represented by Common Units.100
    %
   
    
    GGPLP L.L.C., a Delaware limited liability company (the LLC),
has ownership interests in the majority of our properties (other
than those acquired in The Rouse Company merger (the TRC
Merger,).
    
    The Rouse Company LP (TRCLP), successor to The Rouse Company
(TRC), which includes both REIT and taxable REIT subsidiaries
(TRSs), has ownership interests in Consolidated Properties and
Unconsolidated Properties (each as defined below).
 6




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GENERAL GROWTH PROPERTIES, INC.
 
    
    General Growth Management, Inc. (GGMI), a TRS, manages, leases, and performs various
other services for some of our Unconsolidated Real Estate Affiliates (as defined below) and
approximately 30 properties owned by unaffiliated third parties.
  Basis of Presentation
   Accounting for Acquisitions
  Earnings Per Share (EPS)
 Information related to our EPS calculations is summarized as follows: Three Months Ended March 31,2006
    
    
    2005Basic
    
    
    Diluted
    
    
    Basic
    
    
    Diluted(In thousands)Numerators:Income from continuing operations
    
    $
    23,014
    
    
    $
    23,014
    
    
    $
    11,535
    
    
    $
    11,535Discontinued operations, net of minority interests
    
    
    
    
    
    
    
    
    
    
    1,530
    
    
    
    1,530Net income
    
    $
    23,014
    
    
    $
    23,014
    
    
    $
    13,065
    
    
    $
    13,065Denominators:Weighted average number of common shares
outstanding  basic
    
    
    240,621
    
    
    
    240,621
    
    
    
    235,812
    
    
    
    235,812Effect of dilutive securities  options
    
    
    
    
    
    
    967
    
    
    
    
    
    
    
    776Weighted average number of common shares
outstanding  diluted
    
    
    240,621
    
    
    
    241,588
    
    
    
    235,812
    
    
    
    236,588
 7




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GENERAL GROWTH PROPERTIES, INC.
  Revenue Recognition and Related Matters
  Three Months EndedMarch 31,(In thousands)
    
    2006
    
    
    2005Termination income
    
    $
    17,240
    
    
    $
    2,527Accretion of above and below-market leases
    
    
    9,104
    
    
    
    7,726
  Employee Benefit and Stock Plans
 Incentive Stock Plans
  
    
    Restricted stock grants
    
    Threshold-vesting stock options (TSOs)
    
    Stock options (pursuant to the 2003 Incentive Stock Plan, Executive Stock Options)
  8




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GENERAL GROWTH PROPERTIES, INC.
  TSO Grant Year2006
    
    
    2005
    
    
    1999-2003Exercise price
    
    $
    50.47
    
    
    $
    35.41
    
    
    $
    14.00
    *Threshold vesting stock price
    
    
    70.79
    
    
    
    49.66
    
    
    
    19.63
    *Vesting date
    
    
    N/A
    
    
    
    N/A
    
    
    
    2002-2003Fair value of options on grant date
    
    
    3.31
    
    
    
    3.77
    
    
    
    1.03
    *Shares:Original grant
    
    
    1,400,000
    
    
    
    1,000,000
    
    
    
    4,523,952Forfeited
    
    
    (38,060
    )
    
    
    (83,289
    )
    
    
    (845,826
    )Vested and exchanged for cash
    
    
    
    
    
    
    
    
    
    
    (2,647,509
    )Vested and exercised
    
    
    
    
    
    
    
    
    
    
    (862,770
    )Outstanding
    
    
    1,361,940
    
    
    
    916,711
    
    
    
    167,847
 
 *
    
    Weighted average amounts  Use of Estimates
  Reclassifications
and Corrections
  9




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GENERAL GROWTH PROPERTIES, INC.


NOTE 2 INTANGIBLES




Gross Asset
    
    Accumulated
    
    Net Carrying(In thousands)
    
    (Liability)
    
    (Amortization)/Accretion
    
    AmountAs of March 31, 2006Tenant leases:In-place value
    
    $
    664,444
    
    
    $
    (210,195
    )
    
    $
    454,249Above-market
    
    
    106,117
    
    
    
    (35,640
    )
    
    
    70,477Below-market
    
    
    (293,967
    )
    
    
    127,984
    
    
    
    (165,983
    )Ground leases:Above-market
    
    
    (16,968
    )
    
    
    653
    
    
    
    (16,315
    )Below-market
    
    
    358,524
    
    
    
    (10,078
    )
    
    
    348,446Real estate tax
stabilization
agreement
    
    
    91,879
    
    
    
    (5,534
    )
    
    
    86,345As of December 31, 2005Tenant leases:In-place value
    
    $
    664,444
    
    
    $
    (176,190
    )
    
    $
    488,254Above-market
    
    
    106,117
    
    
    
    (29,023
    )
    
    
    77,094Below-market
    
    
    (293,967
    )
    
    
    111,697
    
    
    
    (182,270
    )Ground leases:Above-market
    
    
    (16,968
    )
    
    
    535
    
    
    
    (16,433
    )Below-market
    
    
    358,524
    
    
    
    (8,736
    )
    
    
    349,788Real estate tax
stabilization
agreement
    
    
    91,879
    
    
    
    (4,691
    )
    
    
    87,188






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




10




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GENERAL GROWTH PROPERTIES, INC.
    Condensed Combined Financial Information of Unconsolidated Real Estate Affiliates
  December 31,(In thousands)
    
    March 31, 2006
    
    
    2005Condensed Combined Balance Sheets  Unconsolidated Real Estate AffiliatesAssets:Land
    
    $
    929,647
    
    
    $
    919,532Buildings and equipment
    
    
    7,760,735
    
    
    
    7,658,896Less accumulated depreciation
    
    
    (1,366,120
    )
    
    
    (1,304,226
    )Developments in progress
    
    
    499,307
    
    
    
    425,057Net property and equipment
    
    
    7,823,569
    
    
    
    7,699,259Investment in unconsolidated joint ventures
    
    
    74,621
    
    
    
    89,430Investment land and land held for sale and development
    
    
    258,394
    
    
    
    259,386Net investment in real estate
    
    
    8,156,584
    
    
    
    8,048,075Cash and cash equivalents
    
    
    174,607
    
    
    
    194,494Accounts and notes receivable, net
    
    
    139,023
    
    
    
    161,218Deferred expenses, net
    
    
    147,266
    
    
    
    148,561Prepaid expenses and other assets
    
    
    217,794
    
    
    
    259,480Total assets
    
    $
    8,835,274
    
    
    $
    8,811,828Liabilities and Owners Equity:Mortgage notes and other property debt payable
    
    $
    6,434,765
    
    
    $
    6,325,118Accounts payable and accrued expenses
    
    
    450,047
    
    
    
    455,596Owners equity
    
    
    1,950,462
    
    
    
    2,031,114Total liabilities and owners equity
    
    $
    8,835,274
    
    
    $
    8,811,828Investment In and Loans To/From Unconsolidated Real Estate AffiliatesOwners equity
    
    $
    1,950,462
    
    
    $
    2,031,114Less joint venture partners equity
    
    
    (1,126,461
    )
    
    
    (1,188,150
    )Capital or basis differences and loans
    
    
    961,285
    
    
    
    975,133Investment in and loans to/from
Unconsolidated Real Estate Affiliates
    
    $
    1,785,286
    
    
    $
    1,818,097
 11




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GENERAL GROWTH PROPERTIES, INC.
 Three Months EndedMarch 31,(In thousands)
    
    2006
    
    
    2005Condensed
Combined Statements of Income  Unconsolidated Real Estate AffiliatesRevenues:Minimum rents
    
    $
    210,979
    
    
    $
    192,445Tenant recoveries
    
    
    93,776
    
    
    
    86,859Overage rents
    
    
    4,700
    
    
    
    3,504Land sales
    
    
    35,331
    
    
    
    16,319Other
    
    
    42,538
    
    
    
    29,849Total revenues
    
    
    387,324
    
    
    
    328,976Expenses:Real estate taxes
    
    
    30,087
    
    
    
    27,531Repairs and maintenance
    
    
    21,240
    
    
    
    21,431Marketing
    
    
    7,121
    
    
    
    6,826Other property operating costs
    
    
    73,675
    
    
    
    57,864Land sales operations
    
    
    18,917
    
    
    
    7,204Provision for doubtful accounts
    
    
    288
    
    
    
    2,208Property management and other costs
    
    
    16,118
    
    
    
    14,027General and administrative
    
    
    1,920
    
    
    
    481Depreciation and amortization
    
    
    66,226
    
    
    
    58,819Total expenses
    
    
    235,592
    
    
    
    196,391Operating income
    
    
    151,732
    
    
    
    132,585Interest income
    
    
    6,002
    
    
    
    1,532Interest expense
    
    
    (80,821
    )
    
    
    (68,809
    )Equity in income of unconsolidated joint ventures
    
    
    1,429
    
    
    
    1,119Net income
    
    $
    78,342
    
    
    $
    66,427Equity In Income of Unconsolidated Real Estate AffiliatesTotal income of Unconsolidated Real Estate Affiliates
    
    $
    78,342
    
    
    $
    66,427Joint venture partners share of income of
Unconsolidated Real Estate Affiliates
    
    
    (41,075
    )
    
    
    (33,701
    )Amortization of capital or basis differences
    
    
    (8,799
    )
    
    
    (6,035
    )Equity in income of Unconsolidated Real Estate Affiliates
    
    $
    28,468
    
    
    $
    26,691
  12




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##### Table of Contents



GENERAL GROWTH PROPERTIES, INC.
 Three months ended March 31,
    
    GGP/Homart(In thousands)
    
    2006
    
    
    2005Revenues:Minimum rents
    
    $
    58,571
    
    
    $
    59,610Tenant recoveries
    
    
    24,566
    
    
    
    22,943Overage rents
    
    
    1,736
    
    
    
    1,097Other
    
    
    2,239
    
    
    
    1,994Total revenues
    
    
    87,112
    
    
    
    85,644Expenses:Real estate taxes
    
    
    7,897
    
    
    
    7,380Repairs and maintenance
    
    
    6,498
    
    
    
    7,135Marketing
    
    
    2,272
    
    
    
    2,450Other property operating costs
    
    
    10,456
    
    
    
    7,872Provision for doubtful accounts
    
    
    (194
    )
    
    
    330Property management and other costs
    
    
    5,541
    
    
    
    5,065General and administrative
    
    
    98
    
    
    
    99Depreciation and amortization
    
    
    17,917
    
    
    
    17,020Total expenses
    
    
    50,485
    
    
    
    47,351Operating income
    
    
    36,627
    
    
    
    38,293Interest income
    
    
    2,086
    
    
    
    498Interest expense
    
    
    (21,648
    )
    
    
    (20,329
    )Equity in income of unconsolidated
joint ventures
    
    
    1,429
    
    
    
    1,119Net income
    
    $
    18,494
    
    
    $
    19,581
 Three months ended March 31,
    
    GGP/Homart II(In thousands)
    
    2006
    
    
    2005Revenues:Minimum rents
    
    $
    52,535
    
    
    $
    45,957Tenant recoveries
    
    
    23,591
    
    
    
    23,090Overage rents
    
    
    1,069
    
    
    
    1,035Other
    
    
    2,003
    
    
    
    1,341Total revenues
    
    
    79,198
    
    
    
    71,423Expenses:Real estate taxes
    
    
    7,448
    
    
    
    7,301Repairs and maintenance
    
    
    4,482
    
    
    
    4,727Marketing
    
    
    2,039
    
    
    
    2,377Other property operating costs
    
    
    8,610
    
    
    
    8,038Provision for doubtful accounts
    
    
    79
    
    
    
    611Property management and other costs
    
    
    4,794
    
    
    
    4,088General and administrative
    
    
    1,665
    
    
    
    184Depreciation and amortization
    
    
    15,510
    
    
    
    15,024Total expenses
    
    
    44,627
    
    
    
    42,350Operating income
    
    
    34,571
    
    
    
    29,073Interest income
    
    
    2,873
    
    
    
    478Interest expense
    
    
    (20,112
    )
    
    
    (16,313
    )Net income
    
    $
    17,332
    
    
    $
    13,238
 13




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##### Table of Contents



GENERAL GROWTH PROPERTIES, INC.
 Three months ended March 31,
    
    GGP/Teachers(In thousands)
    
    2006
    
    
    2005Revenues:Minimum rents
    
    $
    25,651
    
    
    $
    20,860Tenant recoveries
    
    
    10,848
    
    
    
    9,579Overage rents
    
    
    594
    
    
    
    65Other
    
    
    518
    
    
    
    470Total revenues
    
    
    37,611
    
    
    
    30,974Expenses:Real estate taxes
    
    
    2,914
    
    
    
    2,749Repairs and maintenance
    
    
    1,893
    
    
    
    1,817Marketing
    
    
    1,037
    
    
    
    856Other property operating costs
    
    
    4,527
    
    
    
    3,699Provision for doubtful accounts
    
    
    (108
    )
    
    
    61Property management and other costs
    
    
    2,190
    
    
    
    1,650General and administrative
    
    
    150
    
    
    
    184Depreciation and amortization
    
    
    7,460
    
    
    
    5,147Total expenses
    
    
    20,063
    
    
    
    16,163Operating income
    
    
    17,548
    
    
    
    14,811Interest income
    
    
    184
    
    
    
    136Interest expense
    
    
    (10,386
    )
    
    
    (4,793
    )Net income
    
    $
    7,346
    
    
    $
    10,154
 NOTE 4 MORTGAGE NOTES AND OTHER PROPERTY DEBT PAYABLE
  March 31,
    
    
    December 31,(In thousands)
    
    2006
    
    
    2005Fixed-rate debt:Commercial mortgage-backed securities
    
    $
    1,180,497
    
    
    $
    1,181,895Other collateralized mortgage notes and other debt payable
    
    
    11,527,837
    
    
    
    11,092,544Corporate and other unsecured term loans
    
    
    1,607,350
    
    
    
    1,631,257Total fixed-rate debt
    
    
    14,315,684
    
    
    
    13,905,696Variable-rate debt:Commercial mortgage-backed securities
    
    
    305,219
    
    
    
    306,270Other collateralized mortgage notes and other debt payable
    
    
    637,945
    
    
    
    888,842Credit facilities
    
    
    141,000
    
    
    
    180,500Corporate and other unsecured term loans
    
    
    5,048,200
    
    
    
    5,137,567Total variable-rate debt
    
    
    6,132,364
    
    
    
    6,513,179Total
    
    $
    20,448,048
    
    
    $
    20,418,875
 14




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##### Table of Contents



GENERAL GROWTH PROPERTIES, INC.
 Commercial Mortgage-Backed Securities
  Outstanding Balance
    
    Number of Collateralized PropertiesConsolidated
    
    Unconsolidated
    
    Consolidated
    
    Unconsolidated(Dollars in millions)GGP MPTC
    
    $
    616.9
    
    
    $
    290.3
    
    
    
    4
    
    
    
    5CMBS 13
    
    
    868.8
    
    
    
    138.6
    
    
    
    11
    
    
    
    2
  Other Collateralized Mortgage Notes and Other Property Debt Payable
   Corporate and Other Unsecured Term Loans
   15




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##### Table of Contents



GENERAL GROWTH PROPERTIES, INC.
       16




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##### Table of Contents



GENERAL GROWTH PROPERTIES, INC.
 Unsecured Term Loans
   Interest Rate Swaps
  GGP
    
    2006 Credit
    
    PropertyMPTC
    
    Agreement
    
    SpecificTotal notional amount (in millions)
    
    $
    25.0
    
    
    $
    350.0
    
    
    $
    380.0Average fixed effective rate (pay rate)
    
    
    4.59
    %
    
    
    3.43
    %
    
    
    5.77
    %Average variable interest rate of related debt
(receive rate)
    
    LIBOR + .92%
    
    LIBOR + 1.25%
    
    LIBOR + 1.48%
  Letters of Credit and Surety Bonds
  NOTE 5 COMMITMENTS AND CONTINGENCIES
    17




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##### Table of Contents



GENERAL GROWTH PROPERTIES, INC.
     NOTE 6 DISCONTINUED OPERATIONS AND GAINS ON DISPOSITIONS OF INTERESTS IN OPERATING PROPERTIES
 18
    Table of Contents  GENERAL GROWTH PROPERTIES, INC.
    NOTE 7 OTHER ASSETS & LIABILITIES
  March 31,
    
    
    December 31,(In thousands)
    
    2006
    
    
    2005Below-market ground leases
    
    $
    348,446
    
    
    $
    349,788Deferred tax assets
    
    
    13,856
    
    
    
    12,457Above-market tenant leases
    
    
    70,477
    
    
    
    77,094Real estate tax stabilization agreement
    
    
    86,345
    
    
    
    87,188Receivables-finance leases and bonds
    
    
    131,432
    
    
    
    136,410Special Improvement District receivable
    
    
    69,172
    
    
    
    66,206Security and escrow deposits
    
    
    94,026
    
    
    
    87,126Funded defined contribution plan assets
    
    
    16,955
    
    
    
    20,062Prepaid expenses
    
    
    32,551
    
    
    
    29,884Other
    
    
    98,169
    
    
    
    54,154$
    961,429
    
    
    $
    920,369
  March 31,
    
    
    December 31,(In thousands)
    
    2006
    
    
    2005Below-market tenant leases
    
    $
    165,983
    
    
    $
    182,270Accounts payable and accrued expenses
    
    
    517,059
    
    
    
    594,876Deferred gains/income
    
    
    53,635
    
    
    
    38,736Hughes participation payable
    
    
    64,914
    
    
    
    61,783Capital lease obligations
    
    
    18,626
    
    
    
    19,206Insurance reserves
    
    
    20,859
    
    
    
    24,287Other
    
    
    84,599
    
    
    
    111,256$
    925,675
    
    
    $
    1,032,414
 19
    Table of Contents  GENERAL GROWTH PROPERTIES, INC.
 NOTE 8 RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
      20
    Table of Contents  GENERAL GROWTH PROPERTIES, INC.
  NOTE 9 INCOME TAXES
    Three Months EndedMarch 31,(In thousands)
    
    2006
    
    
    2005Current
    
    $
    (2,412
    )
    
    $
    (4,726
    )Deferred
    
    
    (23,562
    )
    
    
    6,033Total
    
    $
    (25,974
    )
    
    $
    1,307
  NOTE 10 SEGMENTS
  
    
    Retail and Other  includes the operation and management of regional shopping centers,
office and industrial properties, downtown specialty marketplaces, the retail and
non-retail rental components of mixed-use projects and community retail centers
 21
    Table of Contents  GENERAL GROWTH PROPERTIES, INC.
 
    
    Master Planned Communities  includes the development and sale of land, primarily in
large-scale, long-term community development projects in and around Columbia, Maryland;
Summerlin, Nevada; and Houston, Texas
    (In thousands)Consolidated
    
    
    Unconsolidated
    
    
    SegmentProperties
    
    
    Properties
    
    
    BasisThree Months Ended March 31, 2006Retail and OtherProperty revenues:Minimum rents
    
    $
    437,731
    
    
    $
    105,367
    
    
    $
    543,098Tenant recoveries
    
    
    185,442
    
    
    
    46,566
    
    
    
    232,008Overage rents
    
    
    14,227
    
    
    
    2,350
    
    
    
    16,577Other, including minority interest
    
    
    22,067
    
    
    
    22,106
    
    
    
    44,173Total property revenues
    
    
    659,467
    
    
    
    176,389
    
    
    
    835,856Property operating expenses:Real estate taxes
    
    
    54,964
    
    
    
    14,868
    
    
    
    69,832Repairs and maintenance
    
    
    47,054
    
    
    
    10,556
    
    
    
    57,610Marketing
    
    
    12,030
    
    
    
    3,507
    
    
    
    15,537Other property operating costs
    
    
    86,833
    
    
    
    38,074
    
    
    
    124,907Provision for doubtful accounts
    
    
    6,213
    
    
    
    137
    
    
    
    6,350Total property operating expenses
    
    
    207,094
    
    
    
    67,142
    
    
    
    274,236Retail and other net operating income
    
    
    452,373
    
    
    
    109,247
    
    
    
    561,620Master Planned CommunitiesLand sales
    
    
    137,220
    
    
    
    18,549
    
    
    
    155,769Land sales operations
    
    
    (98,598
    )
    
    
    (12,394
    )
    
    
    (110,992
    )Master Planned Communities net operating income
    
    
    38,622
    
    
    
    6,155
    
    
    
    44,777Real estate property net operating income
    
    $
    490,995
    
    
    $
    115,402
    
    
    $
    606,397Three Months Ended March 31, 2005Retail and OtherProperty revenues:Minimum rents
    
    $
    405,834
    
    
    $
    96,250
    
    
    $
    502,084Tenant recoveries
    
    
    185,057
    
    
    
    43,237
    
    
    
    228,294Overage rents
    
    
    13,607
    
    
    
    1,722
    
    
    
    15,329Other, including minority interest
    
    
    24,092
    
    
    
    15,612
    
    
    
    39,704Total property revenues
    
    
    628,590
    
    
    
    156,821
    
    
    
    785,411Property operating expenses:Real estate taxes
    
    
    53,190
    
    
    
    13,570
    
    
    
    66,760Repairs and maintenance
    
    
    48,435
    
    
    
    10,632
    
    
    
    59,067Marketing
    
    
    13,952
    
    
    
    3,447
    
    
    
    17,399Other property operating costs
    
    
    92,937
    
    
    
    29,856
    
    
    
    122,793Provision for doubtful accounts
    
    
    4,197
    
    
    
    1,047
    
    
    
    5,244Total property operating expenses
    
    
    212,711
    
    
    
    58,552
    
    
    
    271,263Retail and other net operating income
    
    
    415,879
    
    
    
    98,269
    
    
    
    514,148Master Planned CommunitiesLand sales
    
    
    61,250
    
    
    
    8,567
    
    
    
    69,817Land sales operations
    
    
    (53,811
    )
    
    
    (5,659
    )
    
    
    (59,470
    )Master Planned Communities net operating income
    
    
    7,439
    
    
    
    2,908
    
    
    
    10,347Real estate property net operating income
    
    $
    423,318
    
    
    $
    101,177
    
    
    $
    524,495
 22
    Table of Contents  GENERAL GROWTH PROPERTIES, INC.
  (In thousands)
    
    2006
    
    
    2005Real estate property net operating income
    
    $
    606,397
    
    
    $
    524,495Unconsolidated Properties NOI
    
    
    (115,402
    )
    
    
    (101,177
    )Consolidated Properties NOI
    
    
    490,995
    
    
    
    423,318Management and other fees
    
    
    28,713
    
    
    
    18,356Property management and other costs
    
    
    (46,707
    )
    
    
    (34,964
    )General and administrative
    
    
    (3,558
    )
    
    
    (2,811
    )Depreciation and amortization
    
    
    (165,346
    )
    
    
    (161,725
    )Discontinued operations and minority
interest in consolidated NOI
    
    
    3,219
    
    
    
    (1,739
    )Operating income
    
    
    307,316
    
    
    
    240,435Interest income
    
    
    3,222
    
    
    
    1,040Interest expense
    
    
    (278,794
    )
    
    
    (245,274
    )Benefit
(provision) for income taxes
    
    
    (25,974
    )
    
    
    1,307Income allocated to minority interests
    
    
    (11,224
    )
    
    
    (12,664
    )Equity in income of unconsolidated affiliates
    
    
    28,468
    
    
    
    26,691Income from continuing operations
    
    $
    23,014
    
    
    $
    11,535
  (In thousands)
    
    2006
    
    
    2005Segment basis total property revenues
    
    $
    835,856
    
    
    $
    785,411Unconsolidated segment revenues
    
    
    (176,389
    )
    
    
    (156,821
    )Land sales
    
    
    137,220
    
    
    
    61,250Management and other fees, net of discontinued operations
    
    
    28,713
    
    
    
    18,356Income from discontinued operations, net of minority
interest
    
    
    3,219
    
    
    
    (1,739
    )GAAP-basis consolidated total revenues
    
    $
    828,619
    
    
    $
    706,457
  (In thousands)
    
    March 31, 2006
    
    
    December 31,2005Retail and Other
    
    $
    25,457,011
    
    
    $
    25,523,426Master Planned Communities
    
    
    2,138,167
    
    
    
    2,116,58827,595,178
    
    
    
    27,640,014Unconsolidated Properties
    
    
    (4,378,829
    )
    
    
    (4,308,854
    )Corporate and other
    
    
    1,946,355
    
    
    
    1,975,859Total assets
    
    $
    25,162,704
    
    
    $
    25,307,019
 23
    Table of Contents  GENERAL GROWTH PROPERTIES, INC.
 
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  FORWARD-LOOKING INFORMATION
   
    
    Projections of our revenues, income, earnings per share, Funds From Operations, capital expenditures,
dividends, leverage, capital structure or other financial items
    
    Descriptions of plans or objectives of our management for future operations, including pending acquisitions,
debt repayment or restructuring, and development/redevelopment activities
    
    Forecasts of our future economic performance
    
    Descriptions of assumptions underlying or relating to any of the foregoing
  
    
    Future repayment of debt, including the ratio of variable to fixed-rate debt in our portfolio
    
    Future interest rates
    
    Repayment of some of our debt
   24
    Table of Contents  GENERAL GROWTH PROPERTIES, INC.
 Managements Overview & Summary
 Overview  Retail and Other Segment
    
    
    Renewing expiring leases and re-leasing existing space at rates higher than expiring or
existing rates. The average annual new/renewal lease rate for our Consolidated Retail
Properties for the first quarter of 2006 was $35.17 per square foot which was $1.78 per
square foot higher than the average annualized in place rent per square foot, as detailed in
the table immediately below.
    
    Increasing occupancy at the properties so that more space is generating rent. The
occupancy percentage at properties which are not under redevelopment in our Retail Company
Portfolio was 91.1 percent at March 31, 2006, compared to 90.0 percent at March 31, 2005.
    
    Increased tenant sales in which we participate through overage rents. In the first
quarter of 2006, tenant sales per square foot in our Retail Company Portfolio increased 5.8
percent over 2005 to $444 per square foot.
 25
    Table of Contents  GENERAL GROWTH PROPERTIES, INC.
  Consolidated
    
    Unconsolidated
    
    RetailRetail
    
    Retail
    
    CompanyProperties
    
    Properties
    
    PortfolioOperating Statistics(a)Occupancy
    
    
    90.6
    %
    
    
    92.2
    %
    
    
    91.1
    %Trailing 12 month total tenant sales per sq. ft. (b)
    
    $
    434
    
    
    $
    463
    
    
    $
    444% change in total sales (b)
    
    
    5.7
    %
    
    
    5.9
    %
    
    
    5.8
    %% change in comparable sales (b)
    
    
    2.6
    
    
    
    2.5
    
    
    
    2.6Mall and freestanding GLA
excluding space under redevelopment (in sq. ft.)
    
    
    40,696,778
    
    
    
    18,850,713
    
    
    
    59,547,491Certain Financial InformationAverage annualized in place rent per sq. ft.
    
    $
    33.39
    
    
    $
    36.14Average rent per sq. ft. for new/renewal leases
    
    
    35.17
    
    
    
    36.19Average rent per sq. ft. for leases expiring in 2005
    
    
    30.16
    
    
    
    33.59
 
 (a)
    
    Excludes properties currently being redeveloped and/or remerchandised and miscellaneous
(non-mall) properties.(b)
    
    Due to tenant sales reporting timelines, data presented is as of February 2006.    
    
    Lincolnshire Commons in Lincolnshire (Chicago), Illinois
    
    Otay Ranch Town Center in Chula Vista (San Diego), California
    
    Gateway Overlook in Benson, Maryland
    
    Natick West in Natick, Massachusetts
    
    The Shops at Fallen Timbers, Maumee (Toledo), Ohio
    
    Pinnacle Hills Promenade in Rogers, Arkansas
    
    Vista Commons in Las Vegas, Nevada
     26
    Table of Contents  GENERAL GROWTH PROPERTIES, INC.
 Overview  Master Planned Communities Segment
  SEASONALITY
  CRITICAL ACCOUNTING POLICIES
  27
    Table of Contents  GENERAL GROWTH PROPERTIES, INC.
 RESULTS OF OPERATIONS
 General:
  Retail and Other Segment
  2006
    
    
    2005
    
    
    $ Change
    
    
    % Change(Dollars in thousands)Property revenues:Minimum rents
    
    $
    543,098
    
    
    $
    502,084
    
    
    $
    41,014
    
    
    
    8.2
    %Tenant recoveries
    
    
    232,008
    
    
    
    228,294
    
    
    
    3,714
    
    
    
    1.6Overage rents
    
    
    16,577
    
    
    
    15,329
    
    
    
    1,248
    
    
    
    8.1Other
    
    
    44,173
    
    
    
    39,704
    
    
    
    4,469
    
    
    
    11.3Total property revenues
    
    
    835,856
    
    
    
    785,411
    
    
    
    50,445
    
    
    
    6.4Property operating expenses:Real estate taxes
    
    
    69,832
    
    
    
    66,760
    
    
    
    3,072
    
    
    
    4.6Repairs and maintenance
    
    
    57,610
    
    
    
    59,067
    
    
    
    (1,457
    )
    
    
    (2.5
    )Marketing
    
    
    15,537
    
    
    
    17,399
    
    
    
    (1,862
    )
    
    
    (10.7
    )Other property operating costs
    
    
    124,907
    
    
    
    122,793
    
    
    
    2,114
    
    
    
    1.7Provision for doubtful accounts
    
    
    6,350
    
    
    
    5,244
    
    
    
    1,106
    
    
    
    21.1Total property operating expenses
    
    
    274,236
    
    
    
    271,263
    
    
    
    2,973
    
    
    
    1.1Real estate property net operating income
    
    $
    561,620
    
    
    $
    514,148
    
    
    $
    47,472
    
    
    
    9.2
    %
  
    
    Higher specialty leasing rents, especially at properties acquired in the 2004 TRC Merger
    
    Higher minimum rents, especially at The Shops at La Cantera which opened in September
2005, Ala Moana Center which was recently redeveloped, The Grand Canal Shoppes and St.
Louis Galleria
    
    Higher lease termination income. Termination income, which was $19.1 million higher than
the prior year quarter, is generally negotiated based on amounts to be collected on the
terminated leases. As a result, lease termination income represents an acceleration, rather
than an increase, in revenues collected on such leases
    
    The acquisition of Whalers Village by one of our joint ventures
    28
    Table of Contents  GENERAL GROWTH PROPERTIES, INC.
       Master Planned Communities Segment
 2006
    
    
    2005
    
    
    $ Change
    
    
    % Change(Dollars in thousands)Land sales
    
    $
    155,769
    
    
    $
    69,817
    
    
    $
    85,952
    
    
    
    123.1
    %Land sales operations
    
    
    (110,992
    )
    
    
    (59,470
    )
    
    
    (51,522
    )
    
    
    86.6Real estate property net operating income
    
    $
    44,777
    
    
    $
    10,347
    
    
    $
    34,430
    
    
    
    332.8
    %
  Certain Significant Consolidated Revenues and Expenses
 2006
    
    2005
    
    $ Change
    
    % Change(Dollars in thousands)Tenant rents
    
    $
    637,400
    
    
    $
    604,498
    
    
    $
    32,902
    
    
    
    5.4
    %Land sales
    
    
    137,220
    
    
    
    61,250
    
    
    
    75,970
    
    
    
    124.0Property operating expenses
    
    
    207,094
    
    
    
    212,711
    
    
    
    (5,617
    )
    
    
    (2.6
    )Land sales operations
    
    
    98,598
    
    
    
    53,811
    
    
    
    44,787
    
    
    
    83.2Management and other fees
    
    
    28,713
    
    
    
    18,356
    
    
    
    10,357
    
    
    
    56.4Property management and other costs
    
    
    46,707
    
    
    
    34,964
    
    
    
    11,743
    
    
    
    33.6Depreciation and amortization
    
    
    165,346
    
    
    
    161,725
    
    
    
    3,621
    
    
    
    2.2Interest expense
    
    
    278,794
    
    
    
    245,274
    
    
    
    33,520
    
    
    
    13.7Provision (benefit) for income taxes
    
    
    25,974
    
    
    
    (1,307
    )
    
    
    27,281
    
    
    
    *
 
 *
    
    Not meaningful  29
    Table of Contents  GENERAL GROWTH PROPERTIES, INC.
       
 LIQUIDITY AND CAPITAL RESOURCES
 Cash Flows from Operating Activities
  Cash Flows from Investing Activities
   Cash Flows from Financing Activities
  30
    Table of Contents  GENERAL GROWTH PROPERTIES, INC.
  March 31,
    
    
    December 31,(In millions)
    
    2006
    
    
    2005Consolidated:Fixed-rate debt
    
    $
    15,071
    
    
    $
    14,789Variable-rate debt:Corporate and other unsecured
    
    
    4,839
    
    
    
    4,875Other variable-rate debt
    
    
    538
    
    
    
    755Total variable-rate debt
    
    
    5,377
    
    
    
    5,630Total consolidated
    
    $
    20,448
    
    
    $
    20,419Weighted-average interest rate
    
    
    5.61
    %
    
    
    5.64
    %Unconsolidated:Fixed-rate debt
    
    $
    2,805
    
    
    $
    2,788Variable-rate debt
    
    
    519
    
    
    
    455Total Unconsolidated Real Estate Affiliates
    
    $
    3,324
    
    
    $
    3,243Weighted-average interest rate
    
    
    5.54
    %
    
    
    5.56
    %
       31
    Table of Contents   GENERAL GROWTH PROPERTIES, INC.
   Contractual Cash Obligations and Commitments
  (In thousands)
    
    2006
    
    2007
    
    2008
    
    2009
    
    2010
    
    Subsequent
    
    TotalLong-term debt-principal
    
    $
    2,624,903
    
    
    $
    1,413,710
    
    
    $
    2,166,559
    
    
    $
    3,026,157
    
    
    $
    6,662,221
    
    
    $
    4,417,468
    
    
    $
    20,311,018
   32    Table of Contents  GENERAL GROWTH PROPERTIES, INC.
 REIT Status
  
    
    Scheduled increases in base rents of existing leases
    
    Changes in minimum base rents and/or overage rents attributable to replacement of
existing leases with new or renewal leases
    
    Changes in occupancy rates at existing properties and procurement of leases for newly
developed properties
    
    Necessary capital improvement expenditures or debt repayments at existing properties
    
    Our share of distributions of operating cash flow generated by the Unconsolidated Real
Estate Affiliates, less oversight costs and debt service on additional loans that have been
or will be incurred
    
    Anticipated proceeds from sales in our Master Planned Communities segment.
  RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
  33
    Table of Contents  TRCLP FINANCIAL INFORMATION
 Consolidated Financial Information of TRCLP
  CONSOLIDATED BALANCE SHEETS
 March 31, 2006
    
    
    December 31, 2005(In thousands)AssetsInvestment in real estate:Land
    
    $
    1,257,080
    
    
    $
    1,263,288Buildings and equipment
    
    
    8,390,498
    
    
    
    8,370,635Less accumulated depreciation
    
    
    (433,291
    )
    
    
    (357,859
    )Developments in progress
    
    
    203,236
    
    
    
    203,027Net property and equipment
    
    
    9,417,523
    
    
    
    9,479,091Investment in and loans to/from Unconsolidated Real Estate Affiliates
    
    
    1,195,682
    
    
    
    1,192,976Investment land and land held for development and sale
    
    
    1,644,734
    
    
    
    1,651,063Net investment in real estate
    
    
    12,257,939
    
    
    
    12,323,130Cash and cash equivalents
    
    
    38,121
    
    
    
    73,374Accounts and notes receivable, net
    
    
    74,018
    
    
    
    88,142Insurance recovery receivable
    
    
    58,822
    
    
    
    63,382Goodwill
    
    
    361,897
    
    
    
    420,624Deferred tax assets
    
    
    9,044
    
    
    
    6,480Deferred expenses, net
    
    
    59,414
    
    
    
    51,607Prepaid expenses and other assets
    
    
    780,142
    
    
    
    808,392Total assets
    
    $
    13,639,397
    
    
    $
    13,835,131Liabilities and Partners CapitalMortgage notes and other property debt payable
    
    $
    7,182,021
    
    
    $
    6,503,073Deferred tax liabilities
    
    
    1,252,814
    
    
    
    1,286,576Accounts payable, accrued expenses and other liabilities
    
    
    546,792
    
    
    
    591,679Total liabilities
    
    
    8,981,627
    
    
    
    8,381,328Commitments and contingenciesPartners capital:Partners capital
    
    
    7,213,282
    
    
    
    7,191,001Accumulated other comprehensive income
    
    
    1,079
    
    
    
    877Total partners capital, before receivable from General Growth Properties, Inc.
    
    
    7,214,361
    
    
    
    7,191,878Receivable from General Growth Properties, Inc.
    
    
    (2,556,591
    )
    
    
    (1,738,075
    )Total partners capital
    
    
    4,657,770
    
    
    
    5,453,803Total liabilities and partners capital
    
    $
    13,639,397
    
    
    $
    13,835,131
 34
    Table of Contents  CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
 Three Months EndedMarch 31,2006
    
    
    2005(In thousands)Revenues:Minimum rents
    
    $
    164,750
    
    
    $
    146,365Tenant recoveries
    
    
    68,619
    
    
    
    68,212Overage rents
    
    
    4,079
    
    
    
    3,111Land sales
    
    
    137,220
    
    
    
    61,250Management and other fees
    
    
    6,467
    
    
    
    2,551Other
    
    
    11,285
    
    
    
    10,550Total revenues
    
    
    392,420
    
    
    
    292,039Expenses:Real estate taxes
    
    
    20,512
    
    
    
    19,583Repairs and maintenance
    
    
    18,768
    
    
    
    19,372Marketing
    
    
    2,687
    
    
    
    3,150Other property operating costs
    
    
    35,898
    
    
    
    44,574Land sales operations
    
    
    98,598
    
    
    
    53,811Provision for doubtful accounts
    
    
    3,894
    
    
    
    1,617Property management and other costs
    
    
    19,634
    
    
    
    6,229Depreciation and amortization
    
    
    76,240
    
    
    
    75,905Total expenses
    
    
    276,231
    
    
    
    224,241Operating income
    
    
    116,189
    
    
    
    67,798Interest income
    
    
    1,595
    
    
    
    283Interest expense
    
    
    (77,437
    )
    
    
    (59,205
    )Income before income taxes and allocations to minority interests
and from unconsolidated real estate affiliates
    
    
    40,347
    
    
    
    8,876Provision for income taxes
    
    
    (24,613
    )
    
    
    (4,714
    )Income allocated to minority interests
    
    
    (1,486
    )
    
    
    (1,304
    )Equity in income of unconsolidated real estate affiliates
    
    
    8,033
    
    
    
    1,888Income from continuing operations
    
    
    22,281
    
    
    
    4,746Income from discontinued operations, net of minority interests
    
    
    
    
    
    
    1,886Net income
    
    $
    22,281
    
    
    $
    6,632Comprehensive income, net:Net income
    
    $
    22,281
    
    
    $
    6,632Other comprehensive income:Net unrealized losses on financial instruments
    
    
    (523
    )
    
    
    Unrealized gains on available-for-sale securities
    
    
    724
    
    
    
    153Comprehensive income, net
    
    $
    22,482
    
    
    $
    6,785
 35
    Table of Contents  CONSOLIDATED STATEMENTS OF CASH FLOWS
 Three Months EndedMarch 31,2006
    
    
    2005(In thousands)Cash flows from operating activities:Net Income
    
    $
    22,281
    
    
    $
    6,632Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation
and amortization, including discontinued operations
    
    
    77,001
    
    
    
    77,489Equity in income of unconsolidated real estate affiliates
    
    
    (8,033
    )
    
    
    (1,888
    )Operating
distributions received from unconsolidated real estate affiliates
    
    
    8,033
    
    
    
    1,888Losses (gains) on extinguishment of debt
    
    
    (3,143
    )
    
    
    238Participation expense pursuant to Contingent Stock Agreement
    
    
    38,480
    
    
    
    20,214Land development and acquisition expenditures
    
    
    (47,099
    )
    
    
    (25,347
    )Cost of land sales
    
    
    53,428
    
    
    
    28,507Provision for doubtful accounts, including discontinued operations
    
    
    3,894
    
    
    
    1,675Debt assumed by purchasers of land
    
    
    (4,336
    )
    
    
    (1,118
    )Deferred income taxes
    
    
    22,396
    
    
    
    3,929Proceed from the sale of marketable securities
    
    
    3,107
    
    
    
    4,574Straight-line rent amortization
    
    
    (6,434
    )
    
    
    (4,720
    )Above and below market lease amortization
    
    
    (1,414
    )
    
    
    (510
    )Other intangible amortization
    
    
    2,563
    
    
    
    2,968Amortization
of debt market rate adjustment
    
    
    (7,703
    )
    
    
    (8,129
    )Net changes:Decrease (increase) in accounts and notes receivable
    
    
    12,591
    
    
    
    (6,952
    )Decrease (increase) in other assets
    
    
    6,650
    
    
    
    31,565Increase (decrease) in accounts payable, accrued expenses and
other liabilities
    
    
    (24,591
    )
    
    
    (46,569
    )Other, net
    
    
    2,191
    
    
    
    1,165Net cash provided by operating activities
    
    
    149,862
    
    
    
    85,611Cash flows from investing activities:Acquisition/development of real estate and improvements and additions to properties
    
    
    (38,497
    )
    
    
    (41,621
    )Proceeds from sale of investment property
    
    
    6,208
    
    
    
    Increase in investments in unconsolidated real estate affiliates
    
    
    (5,390
    )
    
    
    (498
    )Distributions received from unconsolidated real estate affiliates in excess of income
    
    
    2,828
    
    
    
    11,938Change in restricted cash
    
    
    703
    
    
    
    771Collection of long-term notes receivable
    
    
    4,855
    
    
    
    Insurance recoveries
    
    
    7,500
    
    
    
    Other, net
    
    
    
    
    
    
    3,172Net cash used in investing activities
    
    
    (21,793
    )
    
    
    (26,238
    )Cash flows from financing activities:Proceeds from issuance of property debt
    
    
    943,000
    
    
    
    959,147Principal payments on mortgages, notes and other property debt payable
    
    
    (251,061
    )
    
    
    (597,338
    )Deferred financing and other related costs
    
    
    (3,227
    )
    
    
    (1,478
    )Advances to General Growth Properties, Inc.
    
    
    (853,865
    )
    
    
    (414,640
    )Other, net
    
    
    1,831
    
    
    
    393Net cash used in financing activities
    
    
    (163,322
    )
    
    
    (53,916
    )Net change in cash and cash equivalents
    
    
    (35,253
    )
    
    
    5,457Cash and cash equivalents at beginning of period
    
    
    73,374
    
    
    
    30,196Cash and cash equivalents at end of period
    
    $
    38,121
    
    
    $
    35,653Supplemental disclosure of cash flow information:Interest paid
    
    $
    87,844
    
    
    $
    59,586Interest capitalized
    
    
    9,155
    
    
    
    12,884Income taxes paid
    
    
    2,019
    
    
    
    3,898
 36
    Table of Contents  DISCUSSION
OF TRCLPS CONSOLIDATED STATEMENT OF INCOME AND CASH POSITION
 Revenues
  Operating expenses
  Net income
  Cash position at March 31, 2006
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  (In millions)
    
    Consolidated
    
    
    UnconsolidatedVariable rate:Subject to interest rate swaps
    
    $
    755
    
    
    $
    178Not subject to interest rate swaps
    
    
    5,377
    
    
    
    519Total
    
    
    6,132
    
    
    
    697Fixed rate
    
    
    14,316
    
    
    
    2,627Total
    
    $
    20,448
    
    
    $
    3,324
  37
    Table of Contents  GENERAL GROWTH PROPERTIES, INC.
 
 ITEM 4. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
  Material Weaknesses Previously Disclosed
    38
    Table of Contents  GENERAL GROWTH PROPERTIES, INC.
 
 PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 2. UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
  ITEM 6. EXHIBITS
 3.1
    
    Restated Certificate of Incorporation of General Growth Properties, Inc. (the
Company) filed with the Delaware Secretary of State on February 10, 2006 (previously
filed as Exhibit 3.1 to the Annual Report on Form 10-K for the year ended December 31,
2005 which was filed with the SEC on March 31, 2006, incorporated herein by reference).4.1
    
    Second Amended and Restated Credit Agreement dated as of February 24, 2006
among the Company, GGP Limited Partnership and GGPLP L.L.C., as Borrowers; the
several lenders from time to time parties thereto; Banc of America Securities LLC,
Eurohypo AG, New York Branch (Eurohypo) and Wachovia Capital Markets, LLC, as
Arrangers; Eurohypo, as Administrative Agent; Bank of America, N.A., and Wachovia
Bank, National Association, as Syndication Agents; and Lehman Commercial Paper, Inc.,
as Documentation Agent (previously filed as Exhibit 4.1 to the Current Report on Form
8-K dated February 24, 2006 which was filed with the SEC on March 2, 2006,
incorporated herein by reference).10.1
    
    Indemnity Agreement dated as of February 2006 by the Company and The Rouse
Company, LP.10.2
    
    Form of Restricted Stock Award.
 39
    Table of Contents  GENERAL GROWTH PROPERTIES, INC.
 31.1
    
    Certification of Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Chief Financial Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
  40
    Table of Contents  SIGNATURE
  GENERAL GROWTH PROPERTIES, INC.
(Registrant) Date:
May 10, 2006
    
    by:
    
    /s/: Bernard FreibaumBernard FreibaumExecutive Vice President and Chief Financial Officer(Principal Accounting Officer)
 41
    Table of Contents   
 EXHIBIT
INDEX
 3.1
    
    Restated Certificate of Incorporation of General Growth Properties, Inc. (the
Company) filed with the Delaware Secretary of State on February 10, 2006 (previously
filed as Exhibit 3.1 to the Annual Report on Form 10-K for the year ended December 31,
2005 which was filed with the SEC on March 31, 2006, incorporated herein by reference).4.1
    
    Second Amended and Restated Credit Agreement dated as of February 24, 2006
among the Company, GGP Limited Partnership and GGPLP L.L.C., as Borrowers; the
several lenders from time to time parties thereto; Banc of America Securities LLC,
Eurohypo AG, New York Branch (Eurohypo) and Wachovia Capital Markets, LLC, as
Arrangers; Eurohypo, as Administrative Agent; Bank of America, N.A., and Wachovia
Bank, National Association, as Syndication Agents; and Lehman Commercial Paper, Inc.,
as Documentation Agent (previously filed as Exhibit 4.1 to the Current Report on Form
8-K dated February 24, 2006 which was filed with the SEC on March 2, 2006,
incorporated herein by reference).10.1
    
    Indemnity Agreement dated as of February 2006 by the Company and The Rouse
Company, LP.10.2
    
    Form of Restricted Stock Award31.1
    
    Certification of Chief Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley act of 2002.31.2
    
    Certification of Chief Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Chief Financial Officer Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.  42