##### 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 September 30, 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 
incorporation or organization)
    
    (I.R.S. Employer
Identification Number)
 (Address of principal executive offices, including Zip Code)
 (Registrants telephone number, including area code)
 (Former name, former address and former fiscal year, if changed since last report)
  þ o
  þ o o
  o þ




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##### 



GENERAL GROWTH PROPERTIES, INC.
 INDEX
 PAGENUMBERPart I FINANCIAL INFORMATIONItem 1: Consolidated Financial Statements (Unaudited)Consolidated Balance Sheets
as of September 30, 2006 and December 31, 2005
    
    
    3Consolidated Statements of Income and Comprehensive Income
for the Three and Nine Months ended September 30, 2006 and 2005
    
    
    4Consolidated Statements of Cash Flows
for the Nine Months ended September 30, 2006 and 2005
    
    
    5Notes to Consolidated Financial Statements
    
    
    7Item 2: Managements Discussion and Analysis of
Financial Condition and Results of Operations
    
    
    34Liquidity and Capital Resources
    
    
    42Item 3: Quantitative and Qualitative Disclosures about Market Risk
    
    
    46Item 4: Controls and Procedures
    
    
    47Part II OTHER INFORMATIONItem 1: Legal Proceedings
    
    
    48Item 1A: Risk Factors
    
    
    48Item 2: Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    49Item 3: Defaults Upon Senior Securities
    
    
    49Item 4: Submission of Matters to a Vote of Security Holders
    
    
    49Item 5: Other Information
    
    
    50Item 6: Exhibits
    
    
    54SIGNATURE
    
    
    55EXHIBIT INDEX
    
    
    56Amendment to 1998 Incentive Stock PlanAmendment to 2003 Incentive Stock Plan302 Certification of Chief Executive Officer302 Certification of Chief Financial Officer906 Certification of Chief Executive Officer906 Certification of Chief Financial Officer




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
 GENERAL GROWTH PROPERTIES, INC.
 
 CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
 September 30,
    
    
    December 31,2006
    
    
    2005AssetsInvestment in real estate:Land
    
    $
    2,931,065
    
    
    $
    2,826,766Buildings and equipment
    
    
    19,181,701
    
    
    
    18,739,445Less accumulated depreciation
    
    
    (2,603,130
    )
    
    
    (2,104,956
    )Developments in progress
    
    
    619,371
    
    
    
    369,520Net property and equipment
    
    
    20,129,007
    
    
    
    19,830,775Investment in and loans to/from Unconsolidated Real Estate Affiliates
    
    
    1,321,891
    
    
    
    1,818,097Investment land and land held for development and sale
    
    
    1,705,852
    
    
    
    1,651,063Net investment in real estate
    
    
    23,156,750
    
    
    
    23,299,935Cash and cash equivalents
    
    
    79,560
    
    
    
    102,791Accounts and notes receivable, net
    
    
    309,629
    
    
    
    293,351Insurance recovery receivables
    
    
    18,409
    
    
    
    63,382Goodwill
    
    
    361,897
    
    
    
    420,624Deferred expenses, net
    
    
    251,191
    
    
    
    209,825Prepaid expenses and other assets
    
    
    818,992
    
    
    
    917,111Total assets
    
    $
    24,996,428
    
    
    $
    25,307,019Liabilities and Stockholders EquityMortgage notes and other property debt payable
    
    $
    20,448,902
    
    
    $
    20,418,875Deferred tax liabilities
    
    
    1,267,302
    
    
    
    1,286,576Accounts payable and accrued expenses
    
    
    1,032,698
    
    
    
    1,032,414Total liabilities
    
    
    22,748,902
    
    
    
    22,737,865Minority interests:Preferred
    
    
    202,229
    
    
    
    205,944Common
    
    
    361,840
    
    
    
    430,292Total minority interests
    
    
    564,069
    
    
    
    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;
241,482,806 and 239,865,045 shares issued
as of September 30,2006 and December 31,2005,
respectively
    
    
    2,415
    
    
    
    2,399Additional paid-in capital
    
    
    2,519,639
    
    
    
    2,469,262Retained earnings (accumulated deficit)
    
    
    (824,894
    )
    
    
    (518,555
    )Unearned compensation-restricted stock
    
    
    (2,569
    )
    
    
    (280
    )Accumulated other comprehensive income
    
    
    12,073
    
    
    
    10,454Less common stock in treasury, 507,409 shares at September 30, 2006
and 668,396 shares at December 31,2005, at cost
    
    
    (23,207
    )
    
    
    (30,362
    )Total
stockholders equity
    
    
    1,683,457
    
    
    
    1,932,918Total liabilities and stockholders equity
    
    $
    24,996,428
    
    
    $
    25,307,019
  3




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##### Table of Contents



GENERAL GROWTH PROPERTIES, INC.
 
 CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED) 
(Dollars in thousands, except for per share amounts)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Revenues:Minimum rents
    
    $
    431,852
    
    
    $
    421,495
    
    
    $
    1,294,635
    
    
    $
    1,231,992Tenant recoveries
    
    
    199,494
    
    
    
    184,958
    
    
    
    575,670
    
    
    
    553,060Overage rents
    
    
    14,744
    
    
    
    13,185
    
    
    
    37,573
    
    
    
    36,497Land sales
    
    
    47,768
    
    
    
    79,457
    
    
    
    218,023
    
    
    
    254,864Management and other fees
    
    
    26,768
    
    
    
    25,070
    
    
    
    80,130
    
    
    
    66,206Other
    
    
    25,405
    
    
    
    21,678
    
    
    
    78,427
    
    
    
    67,909Total revenues
    
    
    746,031
    
    
    
    745,843
    
    
    
    2,284,458
    
    
    
    2,210,528Expenses:Real estate taxes
    
    
    57,227
    
    
    
    49,397
    
    
    
    166,742
    
    
    
    155,011Repairs and maintenance
    
    
    49,122
    
    
    
    47,234
    
    
    
    144,939
    
    
    
    141,483Marketing
    
    
    10,806
    
    
    
    14,905
    
    
    
    34,475
    
    
    
    43,255Other property operating expenses
    
    
    105,231
    
    
    
    99,502
    
    
    
    282,092
    
    
    
    285,744Land sales operations
    
    
    36,360
    
    
    
    60,558
    
    
    
    160,059
    
    
    
    208,549Provision for doubtful accounts
    
    
    3,762
    
    
    
    5,806
    
    
    
    17,081
    
    
    
    14,167Property management and other costs
    
    
    44,522
    
    
    
    30,011
    
    
    
    136,466
    
    
    
    107,903General and administrative
    
    
    5,022
    
    
    
    3,559
    
    
    
    11,712
    
    
    
    10,005Depreciation and amortization
    
    
    168,624
    
    
    
    173,472
    
    
    
    512,342
    
    
    
    507,098Total expenses
    
    
    480,676
    
    
    
    484,444
    
    
    
    1,465,908
    
    
    
    1,473,215Operating income
    
    
    265,355
    
    
    
    261,399
    
    
    
    818,550
    
    
    
    737,313Interest income
    
    
    4,027
    
    
    
    2,844
    
    
    
    8,717
    
    
    
    7,288Interest expense
    
    
    (284,273
    )
    
    
    (271,220
    )
    
    
    (841,677
    )
    
    
    (761,022
    )Loss before income taxes, minority interest
and equity in income of unconsolidated affiliates
    
    
    (14,891
    )
    
    
    (6,977
    )
    
    
    (14,410
    )
    
    
    (16,421
    )Provision for income taxes
    
    
    (11,225
    )
    
    
    (14,864
    )
    
    
    (52,120
    )
    
    
    (28,958
    )Minority interest
    
    
    (4,181
    )
    
    
    (3,596
    )
    
    
    (16,043
    )
    
    
    (23,973
    )Equity in income of unconsolidated affiliates
    
    
    22,136
    
    
    
    16,916
    
    
    
    71,613
    
    
    
    73,251Income (loss) from continuing operations
    
    
    (8,161
    )
    
    
    (8,521
    )
    
    
    (10,960
    )
    
    
    3,899Income from discontinued operations, net of minority interest
    
    
    
    
    
    
    1,687
    
    
    
    
    
    
    
    4,984Net income (loss)
    
    $
    (8,161
    )
    
    $
    (6,834
    )
    
    $
    (10,960
    )
    
    $
    8,883Basic Earnings Per Share:Continuing operations
    
    $
    (0.03
    )
    
    $
    (0.04
    )
    
    $
    (0.05
    )
    
    $
    0.02Discontinued operations
    
    
    
    
    
    
    0.01
    
    
    
    
    
    
    
    0.02Total basic
earnings (loss) per share
    
    $
    (0.03
    )
    
    $
    (0.03
    )
    
    $
    (0.05
    )
    
    $
    0.04Diluted Earnings Per Share:Continuing operations
    
    $
    (0.03
    )
    
    $
    (0.04
    )
    
    $
    (0.05
    )
    
    $
    0.02Discontinued operations
    
    
    
    
    
    
    0.01
    
    
    
    
    
    
    
    0.02Total
diluted earnings (loss) per share
    
    $
    (0.03
    )
    
    $
    (0.03
    )
    
    $
    (0.05
    )
    
    $
    0.04Dividends Declared Per Share
    
    $
    0.41
    
    
    $
    0.36
    
    
    $
    1.23
    
    
    $
    1.08Comprehensive Income (Loss), Net:Net income (loss)
    
    $
    (8,161
    )
    
    $
    (6,834
    )
    
    $
    (10,960
    )
    
    $
    8,883Other comprehensive income, net of minority interest:Net
unrealized gains (losses) on financial
instruments
    
    
    (3,440
    )
    
    
    3,863
    
    
    
    (2,104
    )
    
    
    8,634Minimum pension liability adjustment
    
    
    231
    
    
    
    1
    
    
    
    48
    
    
    
    (181
    )Foreign currency translation
    
    
    (227
    )
    
    
    3,835
    
    
    
    3,928
    
    
    
    7,273Unrealized gains (losses) on available-for-sale
securities
    
    
    (458
    )
    
    
    (29
    )
    
    
    (253
    )
    
    
    193Total other comprehensive income,
net of minority interest
    
    
    (3,894
    )
    
    
    7,670
    
    
    
    1,619
    
    
    
    15,919Comprehensive income (loss), net
    
    $
    (12,055
    )
    
    $
    836
    
    
    $
    (9,341
    )
    
    $
    24,802
  4




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GENERAL GROWTH PROPERTIES, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) 
(Dollars in thousands)
 Nine Months EndedSeptember 30,2006
    
    
    2005Cash flows from operating activities:Net income (loss)
    
    $
    (10,960
    )
    
    $
    8,883Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Minority interest, including discontinued operations
    
    
    16,043
    
    
    
    25,121Equity in income of unconsolidated affiliates
    
    
    (71,613
    )
    
    
    (73,251
    )Provision for doubtful accounts, including discontinued
operations
    
    
    17,081
    
    
    
    14,164Distributions received from unconsolidated affiliates
    
    
    59,844
    
    
    
    74,117Depreciation, including discontinued operations
    
    
    492,932
    
    
    
    497,973Amortization, including discontinued operations
    
    
    32,014
    
    
    
    20,533Amortization of debt market rate adjustment
    
    
    (24,785
    )
    
    
    (36,860
    )Participation expense pursuant to Contingent Stock
Agreement
    
    
    59,197
    
    
    
    75,555Land development and acquisition expenditures
    
    
    (144,365
    )
    
    
    (96,056
    )Cost of land sales
    
    
    78,827
    
    
    
    114,162Debt assumed by purchasers of land
    
    
    (5,032
    )
    
    
    (5,293
    )Proceeds from the sale of marketable securities
    
    
    4,477
    
    
    
    9,088Straight-line rent amortization
    
    
    (36,763
    )
    
    
    (41,640
    )Above and below market tenant lease amortization,
including discontinued operations
    
    
    (29,221
    )
    
    
    (25,349
    )Other intangible amortization
    
    
    4,975
    
    
    
    8,316Net changes:Accounts and notes receivable
    
    
    (7,140
    )
    
    
    1,671Prepaid expenses and other assets
    
    
    (2,879
    )
    
    
    (136,879
    )Deferred expenses
    
    
    (36,690
    )
    
    
    (11,437
    )Accounts payable, accrued expenses and income taxes
    
    
    51,025
    
    
    
    71,338Other, net
    
    
    5,331
    
    
    
    (1,141
    )Net cash provided by operating activities
    
    
    452,298
    
    
    
    493,015Cash flows from investing activities:Acquisition/development of real estate and property additions/improvements
    
    
    (410,405
    )
    
    
    (359,639
    )Proceeds from sale of property
    
    
    6,234
    
    
    
    Increase in investments in unconsolidated affiliates
    
    
    (206,830
    )
    
    
    (102,827
    )(Increase) decrease in restricted cash
    
    
    10,499
    
    
    
    (17,634
    )Insurance recoveries
    
    
    25,784
    
    
    
    5,000Distributions received from unconsolidated affiliates in excess of income
    
    
    618,406
    
    
    
    140,013Loans from unconsolidated affiliates, net
    
    
    37,517
    
    
    
    126,500Other, net
    
    
    4,822
    
    
    
    16,363Net cash provided by (used in) investing activities
    
    
    86,027
    
    
    
    (192,224
    )Cash flows from financing activities:Cash distributions paid to common stockholders
    
    
    (295,377
    )
    
    
    (255,812
    )Cash distributions paid to holders of Common Units
    
    
    (65,182
    )
    
    
    (58,858
    )Cash
distributions paid to holders of perpetual and convertible preferred units
    
    
    (13,039
    )
    
    
    (22,897
    )Proceeds from issuance of common stock, including from common stock plans
    
    
    19,822
    
    
    
    111,721Redemption of preferred minority interests
    
    
    
    
    
    
    (183,000
    )Purchase of treasury stock
    
    
    (69,691
    )
    
    
    (99,580
    )Proceeds
from issuance of mortgage notes and other property debt payable
    
    
    8,979,900
    
    
    
    3,625,537Principal payments on mortgage notes and other property debt payable
    
    
    (9,077,593
    )
    
    
    (3,408,986
    )Deferred financing costs
    
    
    (37,840
    )
    
    
    (22,162
    )Other, net
    
    
    (2,556
    )
    
    
    (5,597
    )Net cash used in financing activities
    
    
    (561,556
    )
    
    
    (319,634
    )Net change in cash and cash equivalents
    
    
    (23,231
    )
    
    
    (18,843
    )Cash and cash equivalents at beginning of period
    
    
    102,791
    
    
    
    39,581Cash and cash equivalents at end of period
    
    $
    79,560
    
    
    $
    20,738
  5




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GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS-CONTINUED  (UNAUDITED)
(Dollars in thousands)
 Nine Months EndedSeptember 30,2006
    
    2005Supplemental disclosure of cash flow information:Interest paid
    
    $
    864,766
    
    
    $
    771,891Interest capitalized
    
    
    40,182
    
    
    
    41,795Taxes paid
    
    
    31,476
    
    
    
    13,422Non-cash investing and financing activities:Common stock issued pursuant to
Contingent Stock Agreement
    
    $
    81,730
    
    
    $
    59,055Common stock issued in exchange
for Operating Partnership Units
    
    
    3,871
    
    
    
    20,796Common stock issued in exchange
for convertible preferred units
    
    
    3,833
    
    
    
    13,368Acquisition of joint venture partner
are of GGP Ivanhoe IV, Inc.:Total assets
    
    
    169,415
    
    
    
    Total liabilities
    
    
    169,415
    
    
    
    
  6




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##### Table of Contents



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).
 
 7




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Basis of Presentation
   Earnings Per Share (EPS)
  Three Months Ended September 30,2006
    
    
    2005Basic
    
    
    Diluted
    
    
    Basic
    
    
    Diluted(In thousands)Numerators:(Loss) from continuing operations
    
    $
    (8,161
    )
    
    $
    (8,161
    )
    
    $
    (8,521
    )
    
    $
    (8,521
    )Discontinued operations, net of
minority interest
    
    
    
    
    
    
    
    
    
    
    1,687
    
    
    
    1,687Net (loss)
    
    $
    (8,161
    )
    
    $
    (8,161
    )
    
    $
    (6,834
    )
    
    $
    (6,834
    )Denominators:Weighted average number of
common shares
outstanding  basic
    
    
    241,150
    
    
    
    241,150
    
    
    
    238,218
    
    
    
    238,218Effect of dilutive securities 
options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weighted average number of
common shares
outstanding  diluted
    
    
    241,150
    
    
    
    241,150
    
    
    
    238,218
    
    
    
    238,218
 8




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##### Table of Contents



Nine Months Ended September 30,2006
    
    
    2005Basic
    
    
    Diluted
    
    
    Basic
    
    
    Diluted(In thousands)Numerators:Income (loss) from
continuing operations
    
    $
    (10,960
    )
    
    $
    (10,960
    )
    
    $
    3,899
    
    
    $
    3,899Discontinued
operations, net of
minority interest
    
    
    
    
    
    
    
    
    
    
    4,984
    
    
    
    4,984Net income (loss)
    
    $
    (10,960
    )
    
    $
    (10,960
    )
    
    $
    8,883
    
    
    $
    8,883Denominators:Weighted average
number of common
shares
outstanding  basic
    
    
    241,034
    
    
    
    241,034
    
    
    
    237,299
    
    
    
    237,299Effect of dilutive
securities  options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    779Weighted average
number of common
shares
outstanding  diluted
    
    
    241,034
    
    
    
    241,034
    
    
    
    237,299
    
    
    
    238,078
  Revenue Recognition and Related Matters
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2006
    
    2005
    
    2006
    
    2005(In thousands)Termination income
    
    $
    1,840
    
    
    $
    1,846
    
    
    $
    20,595
    
    
    $
    11,075Accretion of above and below-market leases, net
    
    
    9,375
    
    
    
    11,108
    
    
    
    29,221
    
    
    
    25,635
  Stock-Based Compensation Expense
  9




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Use of Estimates
  10




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Reclassifications and Corrections
  NOTE 2 INTANGIBLES
  AccumulatedGross Asset
    
    (Amortization)/
    
    Net Carrying(Liability)
    
    Accretion
    
    Amount(In thousands)As of September 30, 2006Tenant leases:In-place value
    
    $
    667,090
    
    
    $
    (279,210
    )
    
    $
    387,880Above-market
    
    
    106,108
    
    
    
    (47,337
    )
    
    
    58,771Below-market
    
    
    (294,052
    )
    
    
    159,811
    
    
    
    (134,241
    )Ground leases:Above-market
    
    
    (16,968
    )
    
    
    889
    
    
    
    (16,079
    )Below-market
    
    
    293,435
    
    
    
    (11,183
    )
    
    
    282,252Real estate tax stabilization
agreement
    
    
    91,879
    
    
    
    (7,520
    )
    
    
    84,359As 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
  11




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##### Table of Contents



NOTE 3 INVESTMENTS IN AND LOANS TO/FROM UNCONSOLIDATED REAL ESTATE AFFILIATES
     12




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##### Table of Contents



Condensed Combined Financial Information of Unconsolidated Real Estate Affiliates
  September 30,
    
    
    December 31,2006
    
    
    2005(In thousands)Condensed Combined Balance Sheets  Unconsolidated Real Estate AffiliatesAssets:Land
    
    $
    937,731
    
    
    $
    919,532Buildings and equipment
    
    
    7,751,150
    
    
    
    7,658,896Less accumulated depreciation
    
    
    (1,532,283
    )
    
    
    (1,304,226
    )Developments in progress
    
    
    803,280
    
    
    
    425,057Net property and equipment
    
    
    7,959,878
    
    
    
    7,699,259Investment in unconsolidated joint ventures
    
    
    36,493
    
    
    
    89,430Investment land and land held for
development and sale
    
    
    293,350
    
    
    
    259,386Net investment in real estate
    
    
    8,289,721
    
    
    
    8,048,075Cash and cash equivalents
    
    
    196,319
    
    
    
    194,494Accounts and notes receivable, net
    
    
    145,906
    
    
    
    161,218Deferred expenses, net
    
    
    151,194
    
    
    
    148,561Prepaid expenses and other assets
    
    
    404,129
    
    
    
    259,480Total assets
    
    $
    9,187,269
    
    
    $
    8,811,828Liabilities and Owners Equity:Mortgage notes and other property debt payable
    
    $
    7,707,241
    
    
    $
    6,325,118Accounts payable and accrued expenses
    
    
    566,070
    
    
    
    455,596Owners equity
    
    
    913,958
    
    
    
    2,031,114Total liabilities and owners equity
    
    $
    9,187,269
    
    
    $
    8,811,828Investment In and Loans To/From Unconsolidated Real Estate AffiliatesOwners equity
    
    $
    913,958
    
    
    $
    2,031,114Less joint venture partners equity
    
    
    (509,544
    )
    
    
    (1,188,150
    )Capital or basis differences and loans
    
    
    917,477
    
    
    
    975,133Investment in and loans to/from
Unconsolidated Real Estate Affiliates
    
    $
    1,321,891
    
    
    $
    1,818,097
 13




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(In thousands)Condensed Combined Statements of Income  Unconsolidated
Real Estate AffiliatesRevenues:Minimum rents
    
    $
    210,301
    
    
    $
    198,332
    
    
    $
    628,477
    
    
    $
    583,708Tenant recoveries
    
    
    95,729
    
    
    
    89,814
    
    
    
    282,112
    
    
    
    264,966Overage rents
    
    
    4,998
    
    
    
    4,031
    
    
    
    12,236
    
    
    
    9,793Land sales
    
    
    41,053
    
    
    
    39,860
    
    
    
    114,779
    
    
    
    110,761Management and other fees
    
    
    15,299
    
    
    
    
    
    
    
    19,021
    
    
    
    Other
    
    
    35,035
    
    
    
    25,107
    
    
    
    117,077
    
    
    
    93,293Total revenues
    
    
    402,415
    
    
    
    357,144
    
    
    
    1,173,702
    
    
    
    1,062,521Expenses:Real estate taxes
    
    
    29,755
    
    
    
    28,024
    
    
    
    89,595
    
    
    
    83,374Repairs and maintenance
    
    
    20,923
    
    
    
    20,437
    
    
    
    63,134
    
    
    
    62,064Marketing
    
    
    5,665
    
    
    
    6,223
    
    
    
    18,580
    
    
    
    20,052Other property operating costs
    
    
    75,103
    
    
    
    54,236
    
    
    
    228,295
    
    
    
    178,955Land sales operations
    
    
    26,257
    
    
    
    29,410
    
    
    
    76,943
    
    
    
    65,165Provision for doubtful accounts
    
    
    723
    
    
    
    3,559
    
    
    
    2,705
    
    
    
    6,910Property management and other costs
    
    
    30,352
    
    
    
    14,203
    
    
    
    60,929
    
    
    
    35,415General and administrative
    
    
    2,026
    
    
    
    657
    
    
    
    4,887
    
    
    
    9,114Depreciation and amortization
    
    
    65,968
    
    
    
    64,328
    
    
    
    195,909
    
    
    
    190,556Total expenses
    
    
    256,772
    
    
    
    221,077
    
    
    
    740,977
    
    
    
    651,605Operating income
    
    
    145,643
    
    
    
    136,067
    
    
    
    432,725
    
    
    
    410,916Interest income
    
    
    9,710
    
    
    
    4,368
    
    
    
    21,546
    
    
    
    7,773Interest expense
    
    
    (90,315
    )
    
    
    (80,643
    )
    
    
    (258,695
    )
    
    
    (221,835
    )Benefit (provision) for income taxes
    
    
    (383
    )
    
    
    21
    
    
    
    (1,191
    )
    
    
    (190
    )Equity in income of unconsolidated joint ventures
    
    
    1,321
    
    
    
    1,262
    
    
    
    4,473
    
    
    
    3,565Net income
    
    $
    65,976
    
    
    $
    61,075
    
    
    $
    198,858
    
    
    $
    200,229Equity In Income of Unconsolidated Real Estate AffiliatesNet income of Unconsolidated Real Estate Affiliates
    
    $
    65,976
    
    
    $
    61,075
    
    
    $
    198,858
    
    
    $
    200,229Joint venture partners share of income of
Unconsolidated Real Estate Affiliates
    
    
    (35,412
    )
    
    
    (31,810
    )
    
    
    (106,918
    )
    
    
    (103,627
    )Amortization of capital or basis differences
    
    
    (8,428
    )
    
    
    (12,349
    )
    
    
    (20,327
    )
    
    
    (23,351
    )Equity in income of
unconsolidated affiliates
    
    $
    22,136
    
    
    $
    16,916
    
    
    $
    71,613
    
    
    $
    73,251
 14




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##### Table of Contents



GGP/HomartThree Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(In thousands)Revenues:Minimum rents
    
    $
    58,174
    
    
    $
    56,049
    
    
    $
    173,757
    
    
    $
    168,726Tenant recoveries
    
    
    26,013
    
    
    
    23,330
    
    
    
    74,245
    
    
    
    70,312Overage rents
    
    
    809
    
    
    
    973
    
    
    
    2,825
    
    
    
    2,642Other
    
    
    2,456
    
    
    
    2,154
    
    
    
    7,063
    
    
    
    6,255Total revenues
    
    
    87,452
    
    
    
    82,506
    
    
    
    257,890
    
    
    
    247,935Expenses:Real estate taxes
    
    
    7,545
    
    
    
    7,673
    
    
    
    23,200
    
    
    
    22,469Repairs and maintenance
    
    
    6,073
    
    
    
    6,167
    
    
    
    18,679
    
    
    
    19,376Marketing
    
    
    1,783
    
    
    
    2,171
    
    
    
    5,783
    
    
    
    7,095Other property operating costs
    
    
    11,782
    
    
    
    8,880
    
    
    
    32,844
    
    
    
    26,188Provision for doubtful accounts
    
    
    819
    
    
    
    391
    
    
    
    1,006
    
    
    
    1,016Property management and other costs
    
    
    5,360
    
    
    
    5,051
    
    
    
    16,354
    
    
    
    15,125General and administrative
    
    
    153
    
    
    
    133
    
    
    
    328
    
    
    
    329Depreciation and amortization
    
    
    17,149
    
    
    
    17,265
    
    
    
    53,034
    
    
    
    51,247Total expenses
    
    
    50,664
    
    
    
    47,731
    
    
    
    151,228
    
    
    
    142,845Operating income
    
    
    36,788
    
    
    
    34,775
    
    
    
    106,662
    
    
    
    105,090Interest income
    
    
    4,868
    
    
    
    1,332
    
    
    
    9,726
    
    
    
    2,499Interest expense
    
    
    (26,875
    )
    
    
    (21,633
    )
    
    
    (71,455
    )
    
    
    (62,795
    )Benefit (provision) for income taxes
    
    
    (93
    )
    
    
    61
    
    
    
    (226
    )
    
    
    (20
    )Equity in income of unconsolidated
joint ventures
    
    
    1,321
    
    
    
    1,262
    
    
    
    4,473
    
    
    
    3,565Net income
    
    $
    16,009
    
    
    $
    15,797
    
    
    $
    49,180
    
    
    $
    48,339
 15




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##### Table of Contents



GGP/Homart IIThree Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(In thousands)Revenues:Minimum rents
    
    $
    48,610
    
    
    $
    49,857
    
    
    $
    149,281
    
    
    $
    143,115Tenant recoveries
    
    
    23,126
    
    
    
    23,904
    
    
    
    69,359
    
    
    
    69,329Overage rents
    
    
    892
    
    
    
    971
    
    
    
    2,484
    
    
    
    2,566Other
    
    
    1,981
    
    
    
    1,639
    
    
    
    5,630
    
    
    
    5,565Total revenues
    
    
    74,609
    
    
    
    76,371
    
    
    
    226,754
    
    
    
    220,575Expenses:Real estate taxes
    
    
    7,256
    
    
    
    6,793
    
    
    
    22,175
    
    
    
    20,530Repairs and maintenance
    
    
    4,418
    
    
    
    4,533
    
    
    
    13,386
    
    
    
    13,824Marketing
    
    
    1,483
    
    
    
    2,016
    
    
    
    5,279
    
    
    
    6,883Other property operating costs
    
    
    9,662
    
    
    
    6,005
    
    
    
    27,082
    
    
    
    20,019Provision for doubtful accounts
    
    
    (273
    )
    
    
    2,297
    
    
    
    65
    
    
    
    3,374Property management and other costs
    
    
    4,663
    
    
    
    4,310
    
    
    
    14,047
    
    
    
    12,680General and administrative
    
    
    1,788
    
    
    
    433
    
    
    
    4,376
    
    
    
    1,435Depreciation and amortization
    
    
    16,307
    
    
    
    15,823
    
    
    
    47,945
    
    
    
    45,998Total expenses
    
    
    45,304
    
    
    
    42,210
    
    
    
    134,355
    
    
    
    124,743Operating income
    
    
    29,305
    
    
    
    34,161
    
    
    
    92,399
    
    
    
    95,832Interest income
    
    
    1,996
    
    
    
    2,417
    
    
    
    6,840
    
    
    
    3,569Interest expense
    
    
    (23,045
    )
    
    
    (22,671
    )
    
    
    (63,878
    )
    
    
    (56,541
    )Benefit (provision) for income taxes
    
    
    46
    
    
    
    216
    
    
    
    (81
    )
    
    
    178Net income
    
    $
    8,302
    
    
    $
    14,123
    
    
    $
    35,280
    
    
    $
    43,038
 16




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##### Table of Contents



GGP/TeachersThree Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(In thousands)Revenues:Minimum rents
    
    $
    26,507
    
    
    $
    21,009
    
    
    $
    78,811
    
    
    $
    61,917Tenant recoveries
    
    
    11,394
    
    
    
    9,895
    
    
    
    34,099
    
    
    
    29,031Overage rents
    
    
    1,173
    
    
    
    240
    
    
    
    2,300
    
    
    
    313Other
    
    
    438
    
    
    
    391
    
    
    
    1,516
    
    
    
    1,407Total revenues
    
    
    39,512
    
    
    
    31,535
    
    
    
    116,726
    
    
    
    92,668Expenses:Real estate taxes
    
    
    2,915
    
    
    
    2,862
    
    
    
    8,773
    
    
    
    8,399Repairs and maintenance
    
    
    1,948
    
    
    
    1,698
    
    
    
    5,765
    
    
    
    5,013Marketing
    
    
    1,051
    
    
    
    783
    
    
    
    2,932
    
    
    
    2,564Other property operating costs
    
    
    4,713
    
    
    
    1,449
    
    
    
    13,694
    
    
    
    8,974Provision for doubtful accounts
    
    
    13
    
    
    
    27
    
    
    
    241
    
    
    
    205Property management and other costs
    
    
    2,212
    
    
    
    1,731
    
    
    
    6,554
    
    
    
    5,055General and administrative
    
    
    68
    
    
    
    83
    
    
    
    151
    
    
    
    156Depreciation and amortization
    
    
    6,341
    
    
    
    5,250
    
    
    
    20,099
    
    
    
    15,575Total expenses
    
    
    19,261
    
    
    
    13,883
    
    
    
    58,209
    
    
    
    45,941Operating income
    
    
    20,251
    
    
    
    17,652
    
    
    
    58,517
    
    
    
    46,727Interest income
    
    
    195
    
    
    
    178
    
    
    
    623
    
    
    
    482Interest expense
    
    
    (11,093
    )
    
    
    (6,809
    )
    
    
    (32,072
    )
    
    
    (16,934
    )Provision for income taxes
    
    
    (213
    )
    
    
    (236
    )
    
    
    (618
    )
    
    
    (521
    )Net income
    
    $
    9,140
    
    
    $
    10,785
    
    
    $
    26,450
    
    
    $
    29,754
 NOTE 4 MORTGAGE NOTES AND OTHER PROPERTY DEBT PAYABLE
  September 30,
    
    
    December 31,(In thousands)
    
    2006
    
    
    2005Fixed-rate debt:Commercial mortgage-backed securities
    
    $
    868,765
    
    
    $
    1,181,895Other collateralized mortgage notes and other debt payable
    
    
    13,576,856
    
    
    
    11,092,544Corporate and other unsecured term loans
    
    
    2,390,381
    
    
    
    1,631,257Total fixed-rate debt
    
    
    16,836,002
    
    
    
    13,905,696Variable-rate debt:Commercial mortgage-backed securities
    
    
    
    
    
    
    306,270Other collateralized mortgage notes and other debt payable
    
    
    386,300
    
    
    
    888,842Credit facilities
    
    
    170,400
    
    
    
    180,500Corporate and other unsecured term loans
    
    
    3,056,200
    
    
    
    5,137,567Total variable-rate debt
    
    
    3,612,900
    
    
    
    6,513,179Total
    
    $
    20,448,902
    
    
    $
    20,418,875
 17




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##### Table of Contents



Commercial Mortgage-Backed Securities
   Other Collateralized Mortgage Notes and Other Property Debt Payable
   Corporate and Other Unsecured Term Loans
    18




---



##### Table of Contents



Unsecured Term Loans
  19




---



##### Table of Contents



Interest Rate Swaps
  2006 Credit
    
    PropertyAgreement
    
    SpecificTotal notional amount (in millions)
    
    $
    425.0
    
    
    $
    195.0Average fixed pay rate
    
    
    3.64
    %
    
    
    4.78
    %Average variable receive rate
    
    LIBOR
    
    LIBOR
  Letters of Credit and Surety Bonds
  NOTE 5 COMMITMENTS AND CONTINGENCIES
   20




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21




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##### Table of Contents



NOTE 6 DISCONTINUED OPERATIONS AND GAINS ON DISPOSITIONS OF INTERESTS IN OPERATING PROPERTIES
    Three Months
    
    Nine MonthsEnded
    
    EndedSeptember 30,
    
    September 30,(In thousands)
    
    2005
    
    2005Revenues
    
    $
    6,025
    
    
    $
    17,710Income before minority interest
    
    
    2,072
    
    
    
    6,131
 22




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##### Table of Contents



NOTE 7 OTHER ASSETS & LIABILITIES
  September 30,
    
    
    December 31,(In thousands)
    
    2006
    
    
    2005Below-market ground leases
    
    $
    282,252
    
    
    $
    349,788Receivables-finance leases and bonds
    
    
    122,915
    
    
    
    136,409Security and escrow deposits
    
    
    79,252
    
    
    
    87,126Real estate tax stabilization agreement
    
    
    84,359
    
    
    
    87,188Special Improvement District receivable
    
    
    70,409
    
    
    
    66,206Above-market tenant leases
    
    
    58,771
    
    
    
    77,094Prepaid expenses
    
    
    53,835
    
    
    
    26,627Funded defined contribution plan assets
    
    
    16,639
    
    
    
    20,062Other
    
    
    50,560
    
    
    
    66,611$
    818,992
    
    
    $
    917,111
  September 30,
    
    
    December 31,(In thousands)
    
    2006
    
    
    2005Accounts payable and accrued expenses
    
    $
    663,601
    
    
    $
    594,876Below-market tenant leases
    
    
    134,241
    
    
    
    182,270Hughes participation payable
    
    
    39,251
    
    
    
    61,783Deferred gains/income
    
    
    59,449
    
    
    
    38,736Capital lease obligations
    
    
    17,481
    
    
    
    19,206Insurance reserves
    
    
    16,505
    
    
    
    24,287Other
    
    
    102,170
    
    
    
    111,256$
    1,032,698
    
    
    $
    1,032,414
 NOTE 8 RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
   23




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##### Table of Contents



(a)
    
    Recognize in its statement of financial position an asset for a plans overfunded
status or a liability for a plans underfunded status(b)
    
    Measure a plans assets and its obligations that determine its funded status as of
the end of the employers fiscal year (with limited exceptions)(c)
    
    Recognize changes in the funded status of a defined benefit postretirement plan in
the year in which the changes occur. Those changes will be reported in comprehensive
income of a business entity.
      24




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##### Table of Contents



NOTE 9 STOCKBASED COMPENSATION PLANS
 Incentive Stock Plans
  25




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##### Table of Contents



WeightedAverageExerciseShares
    
    
    PriceStock options outstanding at December 31, 2005
    
    
    2,546,174
    
    
    $
    29.57Granted
    
    
    1,270,000
    
    
    
    49.98Exercised
    
    
    (562,226
    )
    
    
    24.92Exchanged for restricted stock
    
    
    (30,000
    )
    
    
    47.26Forfeited
    
    
    (145,000
    )
    
    
    43.10Expired
    
    
    (600
    )
    
    
    9.90Stock options outstanding at September 30, 2006
    
    
    3,078,348
    
    
    $
    38.03
 Stock Options Outstanding
    
    
    Stock Options ExercisableWeighted
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    
    
    
    
    AverageRemaining
    
    
    Weighted
    
    
    
    
    
    
    Remaining
    
    
    WeightedContractual
    
    
    Average
    
    
    
    
    
    
    Contractual
    
    
    AverageTerm (in
    
    
    Exercise
    
    
    
    
    
    
    Term (in
    
    
    ExerciseRange of Exercise Prices
    
    Shares
    
    
    years)
    
    
    Price
    
    
    Shares
    
    
    years)
    
    
    PriceIn-the-money stock options$  5.05 - $10.09
    
    
    6,000
    
    
    
    3.6
    
    
    $
    9.99
    
    
    
    6,000
    
    
    
    3.6
    
    
    $
    9.99$10.09 - $15.14
    
    
    65,700
    
    
    
    5.4
    
    
    
    13.58
    
    
    
    65,700
    
    
    
    5.4
    
    
    
    13.58$15.14 - $20.19
    
    
    247,148
    
    
    
    6.4
    
    
    
    16.77
    
    
    
    103,148
    
    
    
    6.4
    
    
    
    16.77$30.28 - $35.33
    
    
    612,500
    
    
    
    3.0
    
    
    
    30.98
    
    
    
    298,500
    
    
    
    3.0
    
    
    
    31.03$35.33 - $40.38
    
    
    972,000
    
    
    
    3.4
    
    
    
    35.61
    
    
    
    292,000
    
    
    
    3.4
    
    
    
    35.55$40.38 - $47.65
    
    
    240,000
    
    
    
    4.2
    
    
    
    46.63
    
    
    
    50,000
    
    
    
    4.3
    
    
    
    47.19Anti-dilutive stock options$47.65 - $50.47
    
    
    935,000
    
    
    
    4.3
    
    
    
    50.47
    
    
    
    155,000
    
    
    
    4.3
    
    
    
    50.47Total
    
    
    3,078,348
    
    
    
    4.0
    
    
    $
    38.03
    
    
    
    970,348
    
    
    
    4.0
    
    
    $
    33.50Intrinsic value (in thousands)
    
    $
    29,614
    
    
    
    
    
    
    
    
    
    
    $
    13,730
   Restricted Stock
  26




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##### Table of Contents



WeightedAverageGrant DateShares
    
    
    Fair ValueNonvested restricted stock grants outstanding as of December 31, 2005
    
    
    15,000
    
    
    $
    16.77Granted
    
    
    99,000
    
    
    
    47.91Vested
    
    
    (41,334
    )
    
    
    37.13Nonvested restricted stock grants outstanding as of September 30, 2006
    
    
    72,666
    
    
    $
    47.62Intrinsic value (in thousands)
    
    $
    3,463
  27




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##### Table of Contents



Threshold-Vesting Stock Options
   TSO Grant Year2006
    
    
    2005TSOs outstanding at December 31, 2005
    
    
    
    
    
    
    1,000,000Granted
    
    
    1,400,000
    
    
    
    -Forfeited
    
    
    (74,317
    )
    
    
    (111,931
    )TSOs outstanding at September 30, 2006
    
    
    1,325,683
    
    
    
    888,069Intrinsic value (in thousands)
    
    
    
    
    
    $
    10,870Exercise price
    
    $
    50.47
    
    
    $
    35.41Threshold Price
    
    
    70.79
    
    
    
    49.66Fair value of options on grant date
    
    
    6.51
    
    
    
    3.81Remaining contractual term (in years)
    
    
    4.4
    
    
    
    3.4
  Other Required Disclosures
  Risk-free interest rate
    
    
    4.43
    %Dividend yield
    
    
    4.00Expected volatility
    
    
    22.94Expected life (in years)
    
    
    2.5 - 3.5
  28




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##### Table of Contents



Employee Stock Purchase Plan
  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
    
    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
   29




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##### Table of Contents



Three Months Ended September 30, 2006Consolidated
    
    
    Unconsolidated
    
    
    Segment(In thousands)
    
    Properties
    
    
    Properties
    
    
    BasisRetail and OtherProperty revenues:Minimum rents
    
    $
    431,852
    
    
    $
    103,028
    
    
    $
    534,880Tenant recoveries
    
    
    199,494
    
    
    
    47,574
    
    
    
    247,068Overage rents
    
    
    14,744
    
    
    
    2,438
    
    
    
    17,182Other, including minority interest
    
    
    21,727
    
    
    
    18,242
    
    
    
    39,969Total property revenues
    
    
    667,817
    
    
    
    171,282
    
    
    
    839,099Property operating expenses:Real estate taxes
    
    
    57,227
    
    
    
    14,626
    
    
    
    71,853Repairs and maintenance
    
    
    49,122
    
    
    
    10,383
    
    
    
    59,505Marketing
    
    
    10,806
    
    
    
    2,788
    
    
    
    13,594Other property operating costs
    
    
    105,231
    
    
    
    38,077
    
    
    
    143,308Provision for doubtful accounts
    
    
    3,762
    
    
    
    349
    
    
    
    4,111Total property
operating expenses
    
    
    226,148
    
    
    
    66,223
    
    
    
    292,371Retail and other net
operating income
    
    
    441,669
    
    
    
    105,059
    
    
    
    546,728Master Planned CommunitiesLand sales
    
    
    47,768
    
    
    
    21,553
    
    
    
    69,321Land sales operations
    
    
    (36,360
    )
    
    
    (16,493
    )
    
    
    (52,853
    )Master Planned Communities net operating
income
    
    
    11,408
    
    
    
    5,060
    
    
    
    16,468Real estate property
net operating income
    
    $
    453,077
    
    
    $
    110,119
    
    
    $
    563,196
 30




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##### Table of Contents



Three Months Ended September 30, 2005Consolidated
    
    
    Unconsolidated
    
    
    Segment(In thousands)
    
    Properties
    
    
    Properties
    
    
    BasisRetail and OtherProperty revenues:Minimum rents
    
    $
    421,495
    
    
    $
    99,739
    
    
    $
    521,234Tenant recoveries
    
    
    184,958
    
    
    
    44,768
    
    
    
    229,726Overage rents
    
    
    13,185
    
    
    
    1,953
    
    
    
    15,138Other, including discontinued operations
and minority interest
    
    
    23,225
    
    
    
    13,690
    
    
    
    36,915Total property revenues
    
    
    642,863
    
    
    
    160,150
    
    
    
    803,013Property operating expenses:Real estate taxes
    
    
    49,397
    
    
    
    13,827
    
    
    
    63,224Repairs and maintenance
    
    
    47,234
    
    
    
    10,162
    
    
    
    57,396Marketing
    
    
    14,905
    
    
    
    3,146
    
    
    
    18,051Other property operating costs
    
    
    99,502
    
    
    
    26,751
    
    
    
    126,253Provision for doubtful accounts
    
    
    5,806
    
    
    
    1,815
    
    
    
    7,621Total property operating expenses
    
    
    216,844
    
    
    
    55,701
    
    
    
    272,545Retail and other net operating income
    
    
    426,019
    
    
    
    104,449
    
    
    
    530,468Master Planned CommunitiesLand sales
    
    
    79,457
    
    
    
    21,330
    
    
    
    100,787Land sales operations
    
    
    (60,558
    )
    
    
    (18,114
    )
    
    
    (78,672
    )Master Planned Communities net operating income
    
    
    18,899
    
    
    
    3,216
    
    
    
    22,115Real estate property net operating income
    
    $
    444,918
    
    
    $
    107,665
    
    
    $
    552,583
 Nine Months Ended September 30, 2006Consolidated
    
    
    Unconsolidated
    
    
    Segment(In thousands)
    
    Properties
    
    
    Properties
    
    
    BasisRetail and OtherProperty revenues:Minimum rents
    
    $
    1,294,635
    
    
    $
    311,758
    
    
    $
    1,606,393Tenant recoveries
    
    
    575,670
    
    
    
    140,027
    
    
    
    715,697Overage rents
    
    
    37,573
    
    
    
    6,173
    
    
    
    43,746Other, including minority interest
    
    
    66,373
    
    
    
    59,340
    
    
    
    125,713Total property revenues
    
    
    1,974,251
    
    
    
    517,298
    
    
    
    2,491,549Property operating expenses:Real estate taxes
    
    
    166,742
    
    
    
    44,136
    
    
    
    210,878Repairs and maintenance
    
    
    144,939
    
    
    
    31,381
    
    
    
    176,320Marketing
    
    
    34,475
    
    
    
    9,253
    
    
    
    43,728Other property operating costs
    
    
    282,092
    
    
    
    110,894
    
    
    
    392,986Provision for doubtful accounts
    
    
    17,081
    
    
    
    1,302
    
    
    
    18,383Total property operating expenses
    
    
    645,329
    
    
    
    196,966
    
    
    
    842,295Retail and other net operating income
    
    
    1,328,922
    
    
    
    320,332
    
    
    
    1,649,254Master Planned CommunitiesLand sales
    
    
    218,023
    
    
    
    60,352
    
    
    
    278,375Land sales operations
    
    
    (160,059
    )
    
    
    (44,443
    )
    
    
    (204,502
    )Master Planned Communities net operating income
    
    
    57,964
    
    
    
    15,909
    
    
    
    73,873Real estate property net operating income
    
    $
    1,386,886
    
    
    $
    336,241
    
    
    $
    1,723,127
 31




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##### Table of Contents



Nine Months Ended September 30, 2005Consolidated
    
    
    Unconsolidated
    
    
    Segment(In thousands)
    
    Properties
    
    
    Properties
    
    
    BasisRetail and OtherProperty revenues:Minimum rents
    
    $
    1,231,992
    
    
    $
    289,079
    
    
    $
    1,521,071Tenant recoveries
    
    
    553,060
    
    
    
    131,693
    
    
    
    684,753Overage rents
    
    
    36,497
    
    
    
    4,801
    
    
    
    41,298Other, including discontinued operations
and minority interest
    
    
    73,256
    
    
    
    48,888
    
    
    
    122,144Total property revenues
    
    
    1,894,805
    
    
    
    474,461
    
    
    
    2,369,266Property operating expenses:Real estate taxes
    
    
    155,011
    
    
    
    41,022
    
    
    
    196,033Repairs and maintenance
    
    
    141,483
    
    
    
    30,731
    
    
    
    172,214Marketing
    
    
    43,255
    
    
    
    10,141
    
    
    
    53,396Other property operating costs
    
    
    285,744
    
    
    
    89,686
    
    
    
    375,430Provision for doubtful accounts
    
    
    14,167
    
    
    
    3,532
    
    
    
    17,699Total property operating expenses
    
    
    639,660
    
    
    
    175,112
    
    
    
    814,772Retail and other net operating income
    
    
    1,255,145
    
    
    
    299,349
    
    
    
    1,554,494Master Planned CommunitiesLand sales
    
    
    254,864
    
    
    
    58,553
    
    
    
    313,417Land sales operations
    
    
    (208,549
    )
    
    
    (43,212
    )
    
    
    (251,761
    )Master Planned Communities net operating income
    
    
    46,315
    
    
    
    15,341
    
    
    
    61,656Real estate property net operating income
    
    $
    1,301,460
    
    
    $
    314,690
    
    
    $
    1,616,150
 32




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(In thousands)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Real estate property net operating income
    
    $
    563,196
    
    
    $
    552,583
    
    
    $
    1,723,127
    
    
    $
    1,616,150Unconsolidated Properties NOI
    
    
    (110,119
    )
    
    
    (107,665
    )
    
    
    (336,241
    )
    
    
    (314,690
    )Consolidated Properties NOI
    
    
    453,077
    
    
    
    444,918
    
    
    
    1,386,886
    
    
    
    1,301,460Management and other fees
    
    
    26,768
    
    
    
    25,070
    
    
    
    80,130
    
    
    
    66,206Property management and other costs
    
    
    (44,522
    )
    
    
    (30,011
    )
    
    
    (136,466
    )
    
    
    (107,903
    )General and administrative
    
    
    (5,022
    )
    
    
    (3,559
    )
    
    
    (11,712
    )
    
    
    (10,005
    )Depreciation and amortization
    
    
    (168,624
    )
    
    
    (173,472
    )
    
    
    (512,342
    )
    
    
    (507,098
    )Discontinued operations and minority
interest in consolidated NOI
    
    
    3,678
    
    
    
    (1,547
    )
    
    
    12,054
    
    
    
    (5,347
    )Operating income
    
    
    265,355
    
    
    
    261,399
    
    
    
    818,550
    
    
    
    737,313Interest income
    
    
    4,027
    
    
    
    2,844
    
    
    
    8,717
    
    
    
    7,288Interest expense
    
    
    (284,273
    )
    
    
    (271,220
    )
    
    
    (841,677
    )
    
    
    (761,022
    )Provision for income taxes
    
    
    (11,225
    )
    
    
    (14,864
    )
    
    
    (52,120
    )
    
    
    (28,958
    )Minority interest
    
    
    (4,181
    )
    
    
    (3,596
    )
    
    
    (16,043
    )
    
    
    (23,973
    )Equity in income of unconsolidated affiliates
    
    
    22,136
    
    
    
    16,916
    
    
    
    71,613
    
    
    
    73,251Income (loss) from continuing operations
    
    $
    (8,161
    )
    
    $
    (8,521
    )
    
    $
    (10,960
    )
    
    $
    3,899
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(In thousands)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Segment basis total property revenues
    
    $
    839,099
    
    
    $
    803,013
    
    
    $
    2,491,549
    
    
    $
    2,369,266Unconsolidated segment revenues
    
    
    (171,282
    )
    
    
    (160,150
    )
    
    
    (517,298
    )
    
    
    (474,461
    )Land sales
    
    
    47,768
    
    
    
    79,457
    
    
    
    218,023
    
    
    
    254,864Management and other fees, net of discontinued operations
    
    
    26,768
    
    
    
    25,070
    
    
    
    80,130
    
    
    
    66,206Real estate net operating income attributable to
minority interests, net of discontinued operations
    
    
    3,678
    
    
    
    (1,547
    )
    
    
    12,054
    
    
    
    (5,347
    )GAAP-basis consolidated total revenues
    
    $
    746,031
    
    
    $
    745,843
    
    
    $
    2,284,458
    
    
    $
    2,210,528
 33




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##### Table of Contents



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 interest rates
 
    
    Future federal income taxes
 
    
    Expected sales in our Master Planned Communities segment
   34




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##### Table of Contents



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.
 
    
    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 92.4 percent at September 30, 2006, compared to 92.2 percent at September 30,
2005.
 
    
    Increased tenant sales in which we participate through overage rents. In the first nine
months of 2006, tenant sales per square foot in our Retail Company
Portfolio increased 5.7
percent over 2005 to $450 per square foot.
 35




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##### Table of Contents



Consolidated
    
    Unconsolidated
    
    Retail CompanyRetail Properties
    
    Retail Properties
    
    PortfolioOperating Statistics (a)Occupancy
    
    
    92.1
    %
    
    
    93.0
    %
    
    
    92.4
    %Trailing 12 month total tenant sales per sq. ft. (b)
    
    $
    441
    
    
    $
    469
    
    
    $
    450% change in total sales
    
    
    6.3
    %
    
    
    4.6
    %
    
    
    5.7
    %% change in comparable sales (b)
    
    
    2.5
    
    
    
    2.6
    
    
    
    2.5Mall and freestanding GLA
excluding space under redevelopment (in sq. ft.)
    
    
    41,795,170
    
    
    
    18,718,792
    
    
    
    60,513,962Certain Financial InformationAverage annualized in place rent per sq.ft.
    
    $
    33.64
    
    
    $
    36.43Average rent per sq.ft. for new/renewal leases
    
    
    34.19
    
    
    
    39.12Average rent per sq.ft. for leases expiring in 2006
    
    
    30.16
    
    
    
    33.59
 
 (a)
    
    Data is for 100% of the Mall GLA in each portfolio, including those centers that
are owned in part by unconsolidated affiliates. Data excludes properties currently being
redeveloped and/or
remerchandised and miscellaneous (non-mall) properties.(b)
    
    Data presented in the column Company Portfolio are weighted average amounts.(c)
    
    Due to tenant sales reporting timelines, data presented is one month behind reporting date.   
    
    Gateway Overlook in Columbia, Maryland
 
    
    Natick West in Natick, Massachusetts
 
    
    The Shops at Fallen Timbers, Maumee (Toledo), Ohio
 
    
    Vista Commons in Las Vegas, Nevada
 
    
    Parke West in Peoria, Arizona
 
    
    RiverCrossing in Macon, Georgia
   36




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##### Table of Contents



Overview
 Master Planned Communities Segment
  SEASONALITY
  CRITICAL ACCOUNTING POLICIES
  RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
 General
  37




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##### Table of Contents



Retail and Other Segment
  Three Months EndedSeptember 30,(Dollars in thousands)
    
    2006
    
    
    2005
    
    
    $ Change
    
    
    % ChangeProperty revenues:Minimum rents
    
    $
    534,880
    
    
    $
    521,234
    
    
    $
    13,646
    
    
    
    2.6
    %Tenant recoveries
    
    
    247,068
    
    
    
    229,726
    
    
    
    17,342
    
    
    
    7.5Overage rents
    
    
    17,182
    
    
    
    15,138
    
    
    
    2,044
    
    
    
    13.5Other
    
    
    39,969
    
    
    
    36,915
    
    
    
    3,054
    
    
    
    8.3Total property revenues
    
    
    839,099
    
    
    
    803,013
    
    
    
    36,086
    
    
    
    4.5Property operating expenses:Real estate taxes
    
    
    71,853
    
    
    
    63,224
    
    
    
    8,629
    
    
    
    13.6Repairs and maintenance
    
    
    59,505
    
    
    
    57,396
    
    
    
    2,109
    
    
    
    3.7Marketing
    
    
    13,594
    
    
    
    18,051
    
    
    
    (4,457
    )
    
    
    (24.7
    )Other property operating costs
    
    
    143,308
    
    
    
    126,253
    
    
    
    17,055
    
    
    
    13.5Provision for doubtful accounts
    
    
    4,111
    
    
    
    7,621
    
    
    
    (3,510
    )
    
    
    (46.1
    )Total property operating expenses
    
    
    292,371
    
    
    
    272,545
    
    
    
    19,826
    
    
    
    7.3Real estate property net operating income
    
    $
    546,728
    
    
    $
    530,468
    
    
    $
    16,260
    
    
    
    3.1
    %
  
    
    Higher specialty leasing and kiosk 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, and Ala Moana Center which was recently redeveloped
    
    Greater use of vacant space for temporary tenant rentals
    
    The acquisition of Whalers Village by one of our joint ventures and the acquisition of
our partners share of GGP Ivanhoe IV, Inc. (Note 3)
      38




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##### Table of Contents



Master Planned Communities Segment
 Three Months EndedSeptember 30,2006
    
    
    2005
    
    
    $ Change
    
    
    % Change(Dollars in thousands)Land sales
    
    $
    69,321
    
    
    $
    100,787
    
    
    $
    (31,466
    )
    
    
    (31.2
    )%Land sales operations
    
    
    (52,853
    )
    
    
    (78,672
    )
    
    
    25,819
    
    
    
    (32.8
    )Real estate property net operating income
    
    $
    16,468
    
    
    $
    22,115
    
    
    $
    (5,647
    )
    
    
    (25.5
    )%
   39




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##### Table of Contents



Certain Significant Consolidated Revenues and Expenses
 Three Months EndedSeptember 30,(Dollars in thousands)
    
    2006
    
    2005
    
    $ Change
    
    % ChangeRevenues:Tenant rents
    
    $
    646,090
    
    
    $
    619,638
    
    
    $
    26,452
    
    
    
    4.3
    %Land sales
    
    
    47,768
    
    
    
    79,457
    
    
    
    (31,689
    )
    
    
    (39.9
    )Management and other fees
    
    
    26,768
    
    
    
    25,070
    
    
    
    1,698
    
    
    
    6.8Expenses:Property operating expenses
    
    
    226,148
    
    
    
    216,844
    
    
    
    9,304
    
    
    
    4.3Land sales operations
    
    
    36,360
    
    
    
    60,558
    
    
    
    (24,198
    )
    
    
    (40.0
    )Property management and other costs
    
    
    44,522
    
    
    
    30,011
    
    
    
    14,511
    
    
    
    48.4Depreciation and amortization
    
    
    168,624
    
    
    
    173,472
    
    
    
    (4,848
    )
    
    
    (2.8
    )Interest expense
    
    
    284,273
    
    
    
    271,220
    
    
    
    13,053
    
    
    
    4.8Provision for income taxes
    
    
    11,225
    
    
    
    14,864
    
    
    
    (3,639
    )
    
    
    (24.5
    )
      
    
    Increase in interest rates both on new fixed-rate financings and variable-rate debt as a
result of increases in the LIBOR rate
 
    
    Increased amortization of deferred finance costs as a result of finance costs incurred in
conjunction with the 2006 Credit Facility
 
    
    Lower amortization of purchase accounting mark-to-market adjustments (which reduce
interest expense). This amortization is reduced as debt is repaid and refinanced.
   40




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RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
 Retail and Other Segment
  Nine Months EndedSeptember 30,(Dollars in thousands)
    
    2006
    
    
    2005
    
    
    $ Change
    
    
    % ChangeProperty revenues:Minimum rents
    
    $
    1,606,393
    
    
    $
    1,521,071
    
    
    $
    85,322
    
    
    
    5.6
    %Tenant recoveries
    
    
    715,697
    
    
    
    684,753
    
    
    
    30,944
    
    
    
    4.5Overage rents
    
    
    43,746
    
    
    
    41,298
    
    
    
    2,448
    
    
    
    5.9Other
    
    
    125,713
    
    
    
    122,144
    
    
    
    3,569
    
    
    
    2.9Total property revenues
    
    
    2,491,549
    
    
    
    2,369,266
    
    
    
    122,283
    
    
    
    5.2Property operating expenses:Real estate taxes
    
    
    210,878
    
    
    
    196,033
    
    
    
    14,845
    
    
    
    7.6Repairs and maintenance
    
    
    176,320
    
    
    
    172,214
    
    
    
    4,106
    
    
    
    2.4Marketing
    
    
    43,728
    
    
    
    53,396
    
    
    
    (9,668
    )
    
    
    (18.1
    )Other property operating costs
    
    
    392,986
    
    
    
    375,430
    
    
    
    17,556
    
    
    
    4.7Provision for doubtful accounts
    
    
    18,383
    
    
    
    17,699
    
    
    
    684
    
    
    
    3.9Total property operating expenses
    
    
    842,295
    
    
    
    814,772
    
    
    
    27,523
    
    
    
    3.4Real estate property net operating income
    
    $
    1,649,254
    
    
    $
    1,554,494
    
    
    $
    94,760
    
    
    
    6.1
    %
    Master Planned Communities Segment
 Nine Months EndedSeptember 30,2006
    
    
    2005
    
    
    $ Change
    
    
    % Change(Dollars in thousands)Land sales
    
    $
    278,375
    
    
    $
    313,417
    
    
    $
    (35,042
    )
    
    
    (11.2
    )%Land sales operations
    
    
    (204,502
    )
    
    
    (251,761
    )
    
    
    47,259
    
    
    
    (18.8
    )Real estate property net operating income
    
    $
    73,873
    
    
    $
    61,656
    
    
    $
    12,217
    
    
    
    19.8
    %
  41




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Certain Significant Consolidated Revenues and Expenses
 Nine Months EndedSeptember 30,(Dollars in thousands)
    
    2006
    
    2005
    
    $ Change
    
    % ChangeRevenues:Tenant rents
    
    $
    1,907,878
    
    
    $
    1,821,549
    
    
    $
    86,329
    
    
    
    4.7
    %Land sales
    
    
    218,023
    
    
    
    254,864
    
    
    
    (36,841
    )
    
    
    (14.5
    )Management and other fees
    
    
    80,130
    
    
    
    66,206
    
    
    
    13,924
    
    
    
    21.0Expenses:Property operating expenses
    
    
    645,329
    
    
    
    639,660
    
    
    
    5,669
    
    
    
    0.9Land sales operations
    
    
    160,059
    
    
    
    208,549
    
    
    
    (48,490
    )
    
    
    (23.3
    )Property management and other costs
    
    
    136,466
    
    
    
    107,903
    
    
    
    28,563
    
    
    
    26.5Depreciation and amortization
    
    
    512,342
    
    
    
    507,098
    
    
    
    5,244
    
    
    
    1.0Interest expense
    
    
    841,677
    
    
    
    761,022
    
    
    
    80,655
    
    
    
    10.6Provision for income taxes
    
    
    52,120
    
    
    
    28,958
    
    
    
    23,162
    
    
    
    80.0
    
 LIQUIDITY AND CAPITAL RESOURCES
 Cash Flows from Operating Activities
  Cash Flows from Investing Activities
  42




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Cash Flows from Financing Activities
   September 30,
    
    
    December 31,2006
    
    
    2005(In millions)Consolidated:Fixed-rate debt
    
    $
    17,456
    
    
    $
    14,789Variable-rate debt:Corporate and other unsecured
    
    
    2,802
    
    
    
    4,875Other variable-rate debt
    
    
    191
    
    
    
    755Total variable-rate debt
    
    
    2,993
    
    
    
    5,630Total consolidated
    
    $
    20,449
    
    
    $
    20,419Weighted-average
interest rate (excluding deferred finance costs)
    
    
    5.71
    %
    
    
    5.64
    %Unconsolidated:Fixed-rate debt
    
    $
    3,622
    
    
    $
    2,788Variable-rate debt
    
    
    237
    
    
    
    455Total Unconsolidated Real Estate Affiliates
    
    $
    3,859
    
    
    $
    3,243Weighted-average interest rate (excluding deferred finance costs)
    
    
    5.63
    %
    
    
    5.56
    %
    43




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44




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Contractual Cash Obligations and Commitments
  (In thousands)2006
    
    $
    227,3542007
    
    
    1,375,8402008
    
    
    2,213,9942009
    
    
    2,707,0172010
    
    
    6,226,666Subsequent
    
    
    7,578,141Total
    
    $
    20,329,012
      45




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##### Table of Contents



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
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  (In millions)
    
    Consolidated
    
    
    UnconsolidatedVariable rate:Subject to interest rate swaps
    
    $
    620
    
    
    $
    100Not subject to interest rate swaps
    
    
    2,993
    
    
    
    237Total
    
    
    3,613
    
    
    
    337Fixed rate
    
    
    16,836
    
    
    
    3,522Total
    
    $
    20,449
    
    
    $
    3,859
  46




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##### Table of Contents



ITEM 4. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
  Material Weaknesses Previously Disclosed
    47




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PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  48




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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 Issuer Purchases of Equity Securities (1)
 Total Number
    
    
    Approximateof Shares
    
    
    Dollar ValuePurchased
    
    
    of Shares thatas Part of
    
    
    May Yet beTotal
    
    
    Average
    
    
    Publicly
    
    
    PurchasedNumber of
    
    
    Price
    
    
    Announced
    
    
    Under theShares
    
    
    Paid
    
    
    Plans or
    
    
    Plans orPeriod
    
    Purchased
    
    
    per Share
    
    
    Programs
    
    
    ProgramsAugust 8 - 29, 2006
    
    
    12,400
    
    
    $
    44.65
    
    
    
    12,400
    
    
    $
    146,083,073September 1 - 28, 2006
    
    
    338,200
    
    
    
    46.64
    
    
    
    338,200
    
    
    
    130,308,878Total
    
    
    350,600
    
    
    $
    46.57
    
    
    
    350,600
 
 (1)
    
    On August 3, 2005, we announced that our Board of Directors had authorized,
effective immediately, a $200 million per fiscal year common stock repurchase program. Stock
repurchases under this program are made through open market or privately negotiated transactions
through 2009, unless the program is earlier terminated. The repurchase program gives us the
ability to acquire some or all of the shares of common stock to be issued upon the exercise of
certain employee stock options and pursuant to the CSA. 
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  49




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ITEM 5. OTHER INFORMATION
  THE ROUSE COMPANY, L.P.
CONSOLIDATED BALANCE SHEETS  (UNAUDITED)
(In thousands)
 September 30,
    
    
    December 31,2006
    
    
    2005AssetsInvestment in real estate:Land
    
    $
    1,345,607
    
    
    $
    1,263,288Buildings and equipment
    
    
    8,454,439
    
    
    
    8,370,635Less accumulated depreciation
    
    
    (599,047
    )
    
    
    (357,859
    )Developments in progress
    
    
    229,078
    
    
    
    203,027Net property and equipment
    
    
    9,430,077
    
    
    
    9,479,091Investment in and loans to/from Unconsolidated Real Estate Affiliates
    
    
    1,190,322
    
    
    
    1,192,976Investment land and land held for development and sale
    
    
    1,705,852
    
    
    
    1,651,063Net investment in real estate
    
    
    12,326,251
    
    
    
    12,323,130Cash and cash equivalents
    
    
    47,806
    
    
    
    73,374Accounts and notes receivable, net
    
    
    106,981
    
    
    
    88,142Insurance recovery receivable
    
    
    18,409
    
    
    
    63,382Goodwill
    
    
    361,897
    
    
    
    420,624Deferred expenses, net
    
    
    66,343
    
    
    
    51,607Prepaid expenses and other assets
    
    
    697,913
    
    
    
    814,872Total assets
    
    $
    13,625,600
    
    
    $
    13,835,131Liabilities and Partners CapitalMortgage notes and other property debt payable
    
    $
    7,374,719
    
    
    $
    6,503,073Deferred tax liabilities
    
    
    1,267,302
    
    
    
    1,286,576Accounts payable, accrued expenses and other liabilities
    
    
    553,946
    
    
    
    591,679Total liabilities
    
    
    9,195,967
    
    
    
    8,381,328Commitments and contingencies
    
    
    
    
    
    
    Partners capital:Partners capital
    
    
    7,159,433
    
    
    
    7,191,001Accumulated other comprehensive income
    
    
    (44
    )
    
    
    877Total partners capital, before
receivable from General Growth Properties, Inc.
    
    
    7,159,389
    
    
    
    7,191,878Receivable from General Growth Properties, Inc.
    
    
    (2,729,756
    )
    
    
    (1,738,075
    )Total partners capital
    
    
    4,429,633
    
    
    
    5,453,803Total liabilities and partners capital
    
    $
    13,625,600
    
    
    $
    13,835,131
 50




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THE ROUSE COMPANY, L. P.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME  (UNAUDITED)
(In thousands)
 Nine Months EndedSeptember 30,2006
    
    
    2005Revenues:Minimum rents
    
    $
    484,651
    
    
    $
    456,893Tenant recoveries
    
    
    212,392
    
    
    
    205,514Overage rents
    
    
    9,914
    
    
    
    10,064Land sales
    
    
    218,023
    
    
    
    254,864Management and other fees
    
    
    13,044
    
    
    
    10,802Other
    
    
    35,315
    
    
    
    31,239Total revenues
    
    
    973,339
    
    
    
    969,376Expenses:Real estate taxes
    
    
    63,197
    
    
    
    58,571Repairs and maintenance
    
    
    59,288
    
    
    
    58,302Marketing
    
    
    7,132
    
    
    
    10,052Other property operating costs
    
    
    122,051
    
    
    
    141,256Land sales operations
    
    
    160,059
    
    
    
    208,549Provision for doubtful accounts
    
    
    10,912
    
    
    
    5,757Property management and other costs
    
    
    63,861
    
    
    
    25,787Depreciation and amortization
    
    
    241,712
    
    
    
    246,140Total expenses
    
    
    728,212
    
    
    
    754,414Operating income
    
    
    245,127
    
    
    
    214,962Interest income
    
    
    3,975
    
    
    
    5,040Interest expense
    
    
    (251,639
    )
    
    
    (185,715
    )Income (loss) before income taxes, minority interest and
equity in income of unconsolidated real estate affiliates
    
    
    (2,537
    )
    
    
    34,287Provision for income taxes
    
    
    (42,567
    )
    
    
    (33,762
    )Minority interest
    
    
    (4,764
    )
    
    
    (2,947
    )Equity in income of unconsolidated real estate affiliates
    
    
    18,310
    
    
    
    4,773Income (loss) from continuing operations
    
    
    (31,558
    )
    
    
    2,351Income from discontinued operations
    
    
    
    
    
    
    6,131Net income (loss)
    
    $
    (31,558
    )
    
    $
    8,482Comprehensive income (loss), net:Net income (loss)
    
    $
    (31,558
    )
    
    $
    8,482Other comprehensive income:Net unrealized gains (losses) on financial instruments
    
    
    (870
    )
    
    
    904Unrealized gains (losses) on available-for-sale securities
    
    
    (51
    )
    
    
    9Comprehensive income (loss), net
    
    $
    (32,479
    )
    
    $
    9,395
 51




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THE ROUSE COMPANY, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS  (UNAUDITED)
(In thousands)
 Nine Months EndedSeptember 30,2006
    
    
    2005Cash flows from operating activities:Net income (loss)
    
    $
    (31,558
    )
    
    $
    8,482Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Depreciation and amortization, including discontinued operations
    
    
    244,418
    
    
    
    251,691Equity in income of unconsolidated real estate affiliates
    
    
    (18,310
    )
    
    
    (4,773
    )Operating distributions received from unconsolidated real
estate affiliates
    
    
    10,547
    
    
    
    4,773Losses (gains) on extinguishment of debt
    
    
    (3,487
    )
    
    
    (267
    )Participation expense pursuant to Contingent Stock Agreement
    
    
    59,197
    
    
    
    75,555Land development and acquisition expenditures
    
    
    (144,365
    )
    
    
    (96,056
    )Cost of land sales
    
    
    78,827
    
    
    
    114,162Provision
for doubtful accounts, including discontinued operations
    
    
    10,912
    
    
    
    5,754Debt assumed by purchasers of land
    
    
    (5,032
    )
    
    
    (5,293
    )Proceeds from the sale of marketable securities
    
    
    
    
    
    
    9,088Straight-line rent amortization
    
    
    (19,745
    )
    
    
    (19,574
    )Above and below market tenant lease amortization
    
    
    (6,677
    )
    
    
    (4,488
    )Other intangible amortization
    
    
    4,975
    
    
    
    8,316Amortization of debt market rate adjustment
    
    
    (24,014
    )
    
    
    (36,175
    )Net changes:Accounts and notes receivable
    
    
    (15,513
    )
    
    
    (11,301
    )Other assets
    
    
    (19,038
    )
    
    
    (22,080
    )Accounts payable, accrued expenses, and
income taxes
    
    
    72,729
    
    
    
    46,301Other, net
    
    
    1,511
    
    
    
    (2,699
    )Net cash provided by operating activities
    
    
    195,377
    
    
    
    321,416Cash flows from investing activities:Acquisition/development of real estate and property
additions/improvements
    
    
    (86,290
    )
    
    
    (136,061
    )Proceeds from sale of property
    
    
    6,234
    
    
    
    Increase in investments in unconsolidated real estate affiliates
    
    
    (20,588
    )
    
    
    (9,672
    )Distributions received from unconsolidated real estate affiliates
in excess of income
    
    
    21,806
    
    
    
    38,278Change in restricted cash
    
    
    11,207
    
    
    
    (2,480
    )Insurance recoveries
    
    
    25,784
    
    
    
    5,000Other, net
    
    
    4,822
    
    
    
    11,196Net cash used in investing activities
    
    
    (37,025
    )
    
    
    (93,739
    )Cash flows from financing activities:Proceeds
from issuance of mortgage notes and other property debt payable
    
    
    1,743,000
    
    
    
    1,857,037Principal payments on mortgages notes
and other property debt payable
    
    
    (841,580
    )
    
    
    (1,055,357
    )Deferred financing costs
    
    
    (9,444
    )
    
    
    (16,458
    )Advances to General Growth Properties, Inc.
    
    
    (1,073,411
    )
    
    
    (997,241
    )Other, net
    
    
    (2,485
    )
    
    
    (26,199
    )Net cash used in financing activities
    
    
    (183,920
    )
    
    
    (238,218
    )Net change in cash and cash equivalents
    
    
    (25,568
    )
    
    
    (10,541
    )Cash and cash equivalents at beginning of period
    
    
    73,374
    
    
    
    30,196Cash and cash equivalents at end of period
    
    $
    47,806
    
    
    $
    19,655Supplemental disclosure of cash flow information:Interest paid
    
    $
    287,578
    
    
    $
    193,641Interest capitalized
    
    
    32,762
    
    
    
    36,140Income taxes paid
    
    
    29,180
    
    
    
    13,218Transfer of deferred compensation and retirement accounts from
TRCLP to GGMI
    
    
    20,062
    
    
    
    
 52




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MANAGEMENTS DISCUSSION OF TRCLP OPERATIONS AND LIQUIDITY
 Revenues
  Operating expenses
  Net income (loss)
  Cash position at September 30, 2006
  53




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ITEM 6. EXHIBITS
 10.1
    
    Amendment dated November 8, 2006 and effective January 1, 2007 to General Growth Properties,
In. 1998 Incentive Stock Plan.10.2
    
    Amendment dated November 8, 2006 and effective January 1, 2007 to General Growth Properties,
Inc. 2003 Incentive Stock Plan.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.
  54




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SIGNATURE
  GENERAL GROWTH PROPERTIES, INC.(Registrant)Date: November 8, 2006
    
    by:
    
    /s/: Bernard Freibaum

Bernard FreibaumExecutive Vice President and Chief Financial Officer(On behalf of the Registrant and as Principal Accounting Officer)
 55




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EXHIBIT INDEX
 10.1
    
    Amendment dated November 8, 2006 and effective January 1, 2007 to General Growth
Properties, In. 1998 Incentive Stock Plan.10.2
    
    Amendment dated November 8, 2006 and effective January 1, 2007 to General Growth
Properties, Inc. 2003 Incentive Stock Plan.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.
  56