##### 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 June 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
    
    (I.R.S. Employerincorporation or organization)
    
    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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##### Table of Contents



GENERAL GROWTH PROPERTIES, INC.
 INDEX
 PAGENUMBERPart I FINANCIAL INFORMATIONItem 1: Consolidated Financial Statements (Unaudited)Consolidated Balance Sheets
as of June 30, 2006 and December 31, 2005
    
    
    3Consolidated Statements of Income and Comprehensive Income
for the Three and Six Months ended June 30, 2006 and 2005
    
    
    4Consolidated Statements of Cash Flows
for the Six Months ended June 30, 2006 and 2005
    
    
    5Notes to Consolidated Financial Statements
    
    
    7Item 2: Managements Discussion and Analysis of
Financial Condition and Results of Operations
    
    
    32Liquidity and Capital Resources
    
    
    40Item 3: Quantitative and Qualitative Disclosures about Market Risk
    
    
    44Item 4: Controls and Procedures
    
    
    44Part II OTHER INFORMATIONItem 1: Legal Proceedings
    
    
    45Item 1A: Risk Factors
    
    
    45Item 2: Unregistered Sales of Securities and Use of Proceeds
    
    
    45Item 3: Defaults Upon Senior Securities
    
    
    46Item 4: Submission of Matters to a Vote of Security Holders
    
    
    46Item 5: Other Information
    
    
    47Item 6: Exhibits
    
    
    51SIGNATURE
    
    
    52EXHIBIT INDEX
    
    
    532003 Incentive Stock PlanForm of Employee Restricted Stock AgreementForm of Non-Employee Director Restricted Stock AgreementCertification 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
 (UNAUDITED)
 (Dollars in thousands)
 June 30,
    
    
    December 31,2006
    
    
    2005AssetsInvestment in real estate:Land
    
    $
    2,931,252
    
    
    $
    2,826,766Buildings and equipment
    
    
    19,070,259
    
    
    
    18,739,445Less accumulated depreciation
    
    
    (2,442,377
    )
    
    
    (2,104,956
    )Developments in progress
    
    
    518,188
    
    
    
    366,262Net property and equipment
    
    
    20,077,322
    
    
    
    19,827,517Investment in and loans to/from Unconsolidated Real Estate Affiliates
    
    
    1,688,312
    
    
    
    1,818,097Investment land and land held for development and sale
    
    
    1,683,569
    
    
    
    1,651,063Net investment in real estate
    
    
    23,449,203
    
    
    
    23,296,677Cash and cash equivalents
    
    
    75,403
    
    
    
    102,791Accounts and notes receivable, net
    
    
    284,835
    
    
    
    293,351Insurance recovery receivable
    
    
    52,082
    
    
    
    63,382Goodwill
    
    
    361,897
    
    
    
    420,624Deferred expenses, net
    
    
    252,478
    
    
    
    209,825Prepaid expenses and other assets
    
    
    823,430
    
    
    
    920,369Total assets
    
    $
    25,299,328
    
    
    $
    25,307,019Liabilities and Stockholders EquityMortgage notes and other property debt payable
    
    $
    20,695,136
    
    
    $
    20,418,875Deferred tax liabilities
    
    
    1,249,086
    
    
    
    1,286,576Accounts payable and accrued expenses
    
    
    1,002,980
    
    
    
    1,032,414Total liabilities
    
    
    22,947,202
    
    
    
    22,737,865Minority interests:Preferred
    
    
    202,230
    
    
    
    205,944Common
    
    
    385,514
    
    
    
    430,292Total minority interests
    
    
    587,744
    
    
    
    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;
241,273,413 and 239,865,045 shares issued
as of June 30, 2006 and December 31, 2005, respectively
    
    
    2,413
    
    
    
    2,399Additional paid-in capital
    
    
    2,520,595
    
    
    
    2,469,262Retained earnings (accumulated deficit)
    
    
    (718,305
    )
    
    
    (518,555
    )Unearned compensation-restricted stock
    
    
    (2,925
    )
    
    
    (280
    )Accumulated other comprehensive income
    
    
    15,967
    
    
    
    10,454Less common stock in treasury, 1,216,200 shares at June 30, 2006
and 668,396 shares at December 31, 2005, at cost
    
    
    (53,363
    )
    
    
    (30,362
    )Total stockholders equity
    
    
    1,764,382
    
    
    
    1,932,918Total liabilities and stockholders equity
    
    $
    25,299,328
    
    
    $
    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 Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Revenues:Minimum rents
    
    $
    425,052
    
    
    $
    404,663
    
    
    $
    862,784
    
    
    $
    810,497Tenant recoveries
    
    
    190,733
    
    
    
    183,045
    
    
    
    376,176
    
    
    
    368,102Overage rents
    
    
    8,603
    
    
    
    9,706
    
    
    
    22,829
    
    
    
    23,312Land sales
    
    
    33,035
    
    
    
    114,157
    
    
    
    170,255
    
    
    
    175,407Management and other fees
    
    
    24,650
    
    
    
    22,780
    
    
    
    53,362
    
    
    
    41,135Other
    
    
    27,736
    
    
    
    23,879
    
    
    
    53,022
    
    
    
    46,234Total revenues
    
    
    709,809
    
    
    
    758,230
    
    
    
    1,538,428
    
    
    
    1,464,687Expenses:Real estate taxes
    
    
    54,551
    
    
    
    52,424
    
    
    
    109,515
    
    
    
    105,614Repairs and maintenance
    
    
    48,762
    
    
    
    45,813
    
    
    
    95,817
    
    
    
    94,249Marketing
    
    
    11,639
    
    
    
    14,399
    
    
    
    23,669
    
    
    
    28,350Other property operating expenses
    
    
    90,412
    
    
    
    93,319
    
    
    
    176,860
    
    
    
    186,242Land sales operations
    
    
    25,102
    
    
    
    94,181
    
    
    
    123,699
    
    
    
    147,991Provision for doubtful accounts
    
    
    7,106
    
    
    
    4,165
    
    
    
    13,319
    
    
    
    8,361Property management and other costs
    
    
    45,285
    
    
    
    42,956
    
    
    
    91,945
    
    
    
    77,892General and administrative
    
    
    3,132
    
    
    
    3,635
    
    
    
    6,691
    
    
    
    6,446Depreciation and amortization
    
    
    178,372
    
    
    
    171,902
    
    
    
    343,718
    
    
    
    333,626Total expenses
    
    
    464,361
    
    
    
    522,794
    
    
    
    985,233
    
    
    
    988,771Operating income
    
    
    245,448
    
    
    
    235,436
    
    
    
    553,195
    
    
    
    475,916Interest income
    
    
    1,469
    
    
    
    3,403
    
    
    
    4,690
    
    
    
    4,443Interest expense
    
    
    (278,611
    )
    
    
    (244,529
    )
    
    
    (557,404
    )
    
    
    (489,803
    )Income
(loss) before income taxes, minority interest and equity in income of
unconsolidated affiliates
    
    
    (31,694
    )
    
    
    (5,690
    )
    
    
    481
    
    
    
    (9,444
    )Provision for income taxes
    
    
    (14,490
    )
    
    
    (15,359
    )
    
    
    (40,894
    )
    
    
    (14,093
    )Minority interest
    
    
    (638
    )
    
    
    (7,714
    )
    
    
    (11,862
    )
    
    
    (20,378
    )Equity in income of unconsolidated affiliates
    
    
    21,009
    
    
    
    29,647
    
    
    
    49,476
    
    
    
    56,336Income (loss) from continuing operations
    
    
    (25,813
    )
    
    
    884
    
    
    
    (2,799
    )
    
    
    12,421Income from discontinued operations, net of minority interest
    
    
    
    
    
    
    1,768
    
    
    
    
    
    
    
    3,296Net income (loss)
    
    $
    (25,813
    )
    
    $
    2,652
    
    
    $
    (2,799
    )
    
    $
    15,717Basic Earnings Per Share:Continuing operations
    
    $
    (0.11
    )
    
    $
    
    
    
    $
    (0.01
    )
    
    $
    0.05Discontinued operations
    
    
    
    
    
    
    0.01
    
    
    
    
    
    
    
    0.02Total basic earnings (loss) per share
    
    $
    (0.11
    )
    
    $
    0.01
    
    
    $
    (0.01
    )
    
    $
    0.07Diluted Earnings Per Share:Continuing operations
    
    $
    (0.11
    )
    
    $
    
    
    
    $
    (0.01
    )
    
    $
    0.05Discontinued operations
    
    
    
    
    
    
    0.01
    
    
    
    
    
    
    
    0.02Total diluted earnings (loss) per share
    
    $
    (0.11
    )
    
    $
    0.01
    
    
    $
    (0.01
    )
    
    $
    0.07Dividends declared per share
    
    $
    0.41
    
    
    $
    0.36
    
    
    $
    0.82
    
    
    $
    0.72Comprehensive Income (Loss), Net:Net income (loss)
    
    $
    (25,813
    )
    
    $
    2,652
    
    
    $
    (2,799
    )
    
    $
    15,717Other comprehensive income, net of minority interest:Net unrealized gains (losses) on financial instruments
    
    
    50
    
    
    
    (1,355
    )
    
    
    1,336
    
    
    
    4,772Minimum pension liability adjustment
    
    
    (124
    )
    
    
    (75
    )
    
    
    (183
    )
    
    
    (182
    )Foreign currency translation
    
    
    1,102
    
    
    
    3,481
    
    
    
    4,155
    
    
    
    3,437Unrealized gains (losses) on available-for-sale
securities
    
    
    113
    
    
    
    (50
    )
    
    
    205
    
    
    
    240Total other comprehensive income,
net of minority interest
    
    
    1,141
    
    
    
    2,001
    
    
    
    5,513
    
    
    
    8,267Comprehensive income (loss), net
    
    $
    (24,672
    )
    
    $
    4,653
    
    
    $
    2,714
    
    
    $
    23,984
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GENERAL GROWTH PROPERTIES, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (UNAUDITED)
 (Dollars in thousands)
 Six Months EndedJune 30,2006
    
    
    2005Cash flows from operating activities:Net income (loss)
    
    $
    (2,799
    )
    
    $
    15,717Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Minority interest, including discontinued operations
    
    
    11,862
    
    
    
    21,642Equity in income of unconsolidated affiliates
    
    
    (49,476
    )
    
    
    (56,336
    )Provision for doubtful accounts, including discontinued operations
    
    
    13,319
    
    
    
    8,413Distributions received from unconsolidated affiliates
    
    
    40,689
    
    
    
    56,512Depreciation, including discontinued operations
    
    
    331,053
    
    
    
    326,715Amortization, including discontinued operations
    
    
    20,246
    
    
    
    14,125Amortization of debt market rate adjustment
    
    
    (16,458
    )
    
    
    (26,399
    )Participation expense pursuant to Contingent Stock Agreement
    
    
    48,331
    
    
    
    51,687Land development and acquisition expenditures
    
    
    (95,281
    )
    
    
    (59,610
    )Cost of land sales
    
    
    61,630
    
    
    
    84,287Debt assumed by purchasers of land
    
    
    (4,698
    )
    
    
    (4,133
    )Proceeds from the sale of marketable securities
    
    
    4,307
    
    
    
    5,699Straight-line rent amortization
    
    
    (24,267
    )
    
    
    (22,975
    )Above and below market tenant lease amortization
    
    
    (19,846
    )
    
    
    (14,527
    )Other intangible amortization
    
    
    2,919
    
    
    
    5,819Net changes:Accounts and notes receivable
    
    
    18,773
    
    
    
    9,254Prepaid expenses and other assets
    
    
    26,749
    
    
    
    (22,146
    )Deferred expenses
    
    
    (22,493
    )
    
    
    (2,215
    )Accounts payable, accrued expenses and income taxes
    
    
    (12,667
    )
    
    
    (39,796
    )Other, net
    
    
    6,431
    
    
    
    5,051Net cash provided by operating activities
    
    
    338,324
    
    
    
    356,784Cash flows from investing activities:Acquisition/development of real estate and property additions/improvements
    
    
    (269,335
    )
    
    
    (202,632
    )Proceeds from sale of property
    
    
    6,208
    
    
    
    Increase in investments in unconsolidated affiliates
    
    
    (69,181
    )
    
    
    (40,950
    )Decrease in restricted cash
    
    
    (14,081
    )
    
    
    (18,196
    )Insurance recoveries
    
    
    13,400
    
    
    
    Distributions received from unconsolidated affiliates in excess of income
    
    
    117,548
    
    
    
    72,882Loans from unconsolidated affiliates, net
    
    
    29,976
    
    
    
    89,000Other, net
    
    
    4,847
    
    
    
    4,505Net cash used in investing activities
    
    
    (180,618
    )
    
    
    (95,391
    )Cash flows from financing activities:Cash distributions paid to common stockholders
    
    
    (196,949
    )
    
    
    (170,109
    )Cash distributions paid to holders of Common Units
    
    
    (43,490
    )
    
    
    (39,467
    )Cash distributions paid to holders of perpetual and convertible preferred units
    
    
    (8,724
    )
    
    
    (18,579
    )Proceeds from issuance of common stock, including from common stock plans
    
    
    17,901
    
    
    
    36,650Redemption of preferred minority interests
    
    
    
    
    
    
    (183,000
    )Purchase of treasury stock
    
    
    (53,363
    )
    
    
    Proceeds from issuance of mortgage notes and other property debt payable
    
    
    6,629,000
    
    
    
    2,917,537Principal payments on mortgage notes and other property debt payable
    
    
    (6,489,164
    )
    
    
    (2,782,417
    )Deferred financing costs
    
    
    (39,923
    )
    
    
    (4,493
    )Other, net
    
    
    (382
    )
    
    
    (6,547
    )Net cash used in financing activities
    
    
    (185,094
    )
    
    
    (250,425
    )Net change in cash and cash equivalents
    
    
    (27,388
    )
    
    
    10,968Cash and cash equivalents at beginning of period
    
    
    102,791
    
    
    
    39,581Cash and cash equivalents at end of period
    
    $
    75,403
    
    
    $
    50,549
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GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS-CONTINUED  (UNAUDITED)
(Dollars in thousands)
 Six Months EndedJune 30,2006
    
    
    2005Supplemental disclosure of cash flow information:Interest paid
    
    $
    579,044
    
    
    $
    501,973Interest capitalized
    
    
    25,521
    
    
    
    28,941Taxes paid
    
    
    12,572
    
    
    
    6,577Non-cash investing and financing activities:Common stock issued pursuant to Contingent Stock Agreement
    
    $
    35,349
    
    
    $
    18,098Common stock issued in exchange for Operating Partnership Units
    
    
    3,088
    
    
    
    Common stock issued in exchange for convertible preferred units
    
    
    3,833
    
    
    
    18,661Debt assumed in conjunction with acquisition of property
    
    
    
    
    
    
    5,210Acquisition of joint venture partner share of GGP Ivanhoe IV, Inc.:Total assets
    
    
    169,415
    
    
    
    Total liabilities
    
    
    169,415
    
    
    
    
  6




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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).
 7




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##### Table of Contents




    
    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. Effective July 1, 2006, GGMI
also performs marketing and strategic partnership services for all of our Consolidated
Properties.
  Basis of Presentation
   Earnings Per Share (EPS)
  Three Months Ended June 30,2006
    
    
    2005Basic
    
    
    Diluted
    
    
    Basic
    
    
    Diluted(In thousands)Numerators:Income (loss) from continuing operations
    
    $
    (25,813
    )
    
    $
    (25,813
    )
    
    $
    884
    
    
    $
    884Discontinued operations, net of
minority interests
    
    
    
    
    
    
    
    
    
    
    1,768
    
    
    
    1,768Net income (loss)
    
    $
    (25,813
    )
    
    $
    (25,813
    )
    
    $
    2,652
    
    
    $
    2,652Denominators:Weighted average number of common shares
outstanding  basic
    
    
    241,330
    
    
    
    241,330
    
    
    
    237,854
    
    
    
    237,854Effect of dilutive securities  options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,068Weighted average number of common shares
outstanding  diluted
    
    
    241,330
    
    
    
    241,330
    
    
    
    237,854
    
    
    
    238,922
 8




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Six Months Ended June 30,2006
    
    
    2005Basic
    
    
    Diluted
    
    
    Basic
    
    
    Diluted(In thousands)Numerators:Income (loss) from continuing operations
    
    $
    (2,799
    )
    
    $
    (2,799
    )
    
    $
    12,421
    
    
    $
    12,421Discontinued operations, net of
minority interests
    
    
    
    
    
    
    
    
    
    
    3,296
    
    
    
    3,296Net income (loss)
    
    $
    (2,799
    )
    
    $
    (2,799
    )
    
    $
    15,717
    
    
    $
    15,717Denominators:Weighted average number of common shares
outstanding  basic
    
    
    240,978
    
    
    
    240,978
    
    
    
    236,838
    
    
    
    236,838Effect of dilutive securities  options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    865Weighted average number of common shares
outstanding  diluted
    
    
    240,978
    
    
    
    240,978
    
    
    
    236,838
    
    
    
    237,703
  Revenue Recognition and Related Matters
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,(In thousands)
    
    2006
    
    2005
    
    2006
    
    2005Termination income
    
    $
    1,515
    
    
    $
    6,702
    
    
    $
    18,755
    
    
    $
    9,229Accretion of above and below-market leases, net
    
    
    10,742
    
    
    
    6,801
    
    
    
    19,846
    
    
    
    14,527
  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(In thousands)
    
    (Liability)
    
    Accretion
    
    AmountAs of June 30, 2006Tenant leases:In-place value
    
    $
    667,090
    
    
    $
    (248,559
    )
    
    $
    418,531Above-market
    
    
    106,108
    
    
    
    (41,052
    )
    
    
    65,056Below-market
    
    
    (294,052
    )
    
    
    144,170
    
    
    
    (149,882
    )Ground leases:Above-market
    
    
    (16,968
    )
    
    
    771
    
    
    
    (16,197
    )Below-market
    
    
    293,435
    
    
    
    (9,699
    )
    
    
    283,736Real estate tax
stabilization
agreement
    
    
    91,879
    
    
    
    (6,831
    )
    
    
    85,048As 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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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
  June 30,
    
    
    December 31,(In thousands)
    
    2006
    
    
    2005Condensed Combined Balance Sheets  Unconsolidated Real Estate AffiliatesAssets:Land
    
    $
    921,240
    
    
    $
    919,532Buildings and equipment
    
    
    7,668,195
    
    
    
    7,658,896Less accumulated depreciation
    
    
    (1,472,747
    )
    
    
    (1,304,226
    )Developments in progress
    
    
    620,050
    
    
    
    425,057Net property and equipment
    
    
    7,736,738
    
    
    
    7,699,259Investment in unconsolidated joint ventures
    
    
    72,820
    
    
    
    89,430Investment land and land held for sale and development
    
    
    284,553
    
    
    
    259,386Net investment in real estate
    
    
    8,094,111
    
    
    
    8,048,075Cash and cash equivalents
    
    
    221,621
    
    
    
    194,494Accounts and notes receivable, net
    
    
    130,415
    
    
    
    161,218Deferred expenses, net
    
    
    144,657
    
    
    
    148,561Prepaid expenses and other assets
    
    
    261,464
    
    
    
    259,480Total assets
    
    $
    8,852,268
    
    
    $
    8,811,828Liabilities and Owners Equity:Mortgage notes and other property debt payable
    
    $
    6,639,479
    
    
    $
    6,325,118Accounts payable and accrued expenses
    
    
    463,632
    
    
    
    455,596Owners equity
    
    
    1,749,157
    
    
    
    2,031,114Total liabilities and owners equity
    
    $
    8,852,268
    
    
    $
    8,811,828Investment In and Loans To/From Unconsolidated Real Estate AffiliatesOwners equity
    
    $
    1,749,157
    
    
    $
    2,031,114Less joint venture partners equity
    
    
    (996,398
    )
    
    
    (1,188,150
    )Capital or basis differences and loans
    
    
    935,553
    
    
    
    975,133Investment in and loans to/from
Unconsolidated Real Estate Affiliates
    
    $
    1,688,312
    
    
    $
    1,818,097
 13




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(In thousands)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Condensed Combined Statements of Income  Unconsolidated Real Estate AffiliatesRevenues:Minimum rents
    
    $
    208,138
    
    
    $
    192,927
    
    
    $
    419,116
    
    
    $
    385,372Tenant recoveries
    
    
    92,606
    
    
    
    88,298
    
    
    
    186,382
    
    
    
    175,157Overage rents
    
    
    2,538
    
    
    
    2,257
    
    
    
    7,236
    
    
    
    5,761Land sales
    
    
    38,395
    
    
    
    54,581
    
    
    
    73,726
    
    
    
    70,900Other
    
    
    42,280
    
    
    
    38,317
    
    
    
    84,821
    
    
    
    68,166Total revenues
    
    
    383,957
    
    
    
    376,380
    
    
    
    771,281
    
    
    
    705,356Expenses:Real estate taxes
    
    
    29,760
    
    
    
    27,816
    
    
    
    59,847
    
    
    
    55,347Repairs and maintenance
    
    
    23,259
    
    
    
    20,197
    
    
    
    44,499
    
    
    
    41,628Marketing
    
    
    5,795
    
    
    
    7,004
    
    
    
    12,917
    
    
    
    13,830Other property operating costs
    
    
    77,062
    
    
    
    66,964
    
    
    
    150,890
    
    
    
    124,992Land sales operations
    
    
    31,769
    
    
    
    28,551
    
    
    
    50,686
    
    
    
    35,755Provision for doubtful accounts
    
    
    1,697
    
    
    
    1,142
    
    
    
    1,982
    
    
    
    3,351Property management and other costs
    
    
    15,490
    
    
    
    14,360
    
    
    
    31,613
    
    
    
    28,387General and administrative
    
    
    892
    
    
    
    904
    
    
    
    2,655
    
    
    
    1,221Depreciation and amortization
    
    
    63,713
    
    
    
    67,871
    
    
    
    129,939
    
    
    
    126,689Total expenses
    
    
    249,437
    
    
    
    234,809
    
    
    
    485,028
    
    
    
    431,200Operating income
    
    
    134,520
    
    
    
    141,571
    
    
    
    286,253
    
    
    
    274,156Interest income
    
    
    5,832
    
    
    
    1,871
    
    
    
    11,834
    
    
    
    3,403Interest expense
    
    
    (87,563
    )
    
    
    (72,388
    )
    
    
    (168,384
    )
    
    
    (141,197
    )Equity in income of unconsolidated joint ventures
    
    
    1,724
    
    
    
    1,184
    
    
    
    3,152
    
    
    
    2,303Net income
    
    $
    54,513
    
    
    $
    72,238
    
    
    $
    132,855
    
    
    $
    138,665Equity In Income of Unconsolidated Real Estate AffiliatesNet income of Unconsolidated Real Estate Affiliates
    
    $
    54,513
    
    
    $
    72,238
    
    
    $
    132,855
    
    
    $
    138,665Joint venture partners share of income of
Unconsolidated Real Estate Affiliates
    
    
    (29,410
    )
    
    
    (38,320
    )
    
    
    (63,310
    )
    
    
    (71,537
    )Amortization of capital or basis differences
    
    
    (4,094
    )
    
    
    (4,271
    )
    
    
    (20,069
    )
    
    
    (10,792
    )Equity in income of Unconsolidated Real Estate Affiliates
    
    $
    21,009
    
    
    $
    29,647
    
    
    $
    49,476
    
    
    $
    56,336
  14




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GGP/HomartThree months ended
    
    
    Six months endedJune 30,
    
    
    June 30,(In thousands)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Revenues:Minimum rents
    
    $
    57,012
    
    
    $
    53,067
    
    
    $
    115,583
    
    
    $
    112,677Tenant recoveries
    
    
    23,666
    
    
    
    24,039
    
    
    
    48,232
    
    
    
    46,982Overage rents
    
    
    280
    
    
    
    572
    
    
    
    2,016
    
    
    
    1,669Other
    
    
    2,369
    
    
    
    2,106
    
    
    
    4,608
    
    
    
    4,101Total revenues
    
    
    83,327
    
    
    
    79,784
    
    
    
    170,439
    
    
    
    165,429Expenses:Real estate taxes
    
    
    7,758
    
    
    
    7,416
    
    
    
    15,656
    
    
    
    14,796Repairs and maintenance
    
    
    6,108
    
    
    
    6,073
    
    
    
    12,607
    
    
    
    13,209Marketing
    
    
    1,728
    
    
    
    2,474
    
    
    
    4,000
    
    
    
    4,924Other property operating costs
    
    
    10,724
    
    
    
    9,543
    
    
    
    21,180
    
    
    
    17,418Provision for doubtful accounts
    
    
    381
    
    
    
    295
    
    
    
    187
    
    
    
    625Property management and other costs
    
    
    5,453
    
    
    
    5,010
    
    
    
    10,994
    
    
    
    10,074General and administrative
    
    
    93
    
    
    
    71
    
    
    
    191
    
    
    
    167Depreciation and amortization
    
    
    17,967
    
    
    
    16,963
    
    
    
    35,885
    
    
    
    33,982Total expenses
    
    
    50,212
    
    
    
    47,845
    
    
    
    100,700
    
    
    
    95,195Operating income
    
    
    33,115
    
    
    
    31,939
    
    
    
    69,739
    
    
    
    70,234Interest income
    
    
    2,772
    
    
    
    670
    
    
    
    4,858
    
    
    
    1,168Interest expense
    
    
    (22,931
    )
    
    
    (20,833
    )
    
    
    (44,580
    )
    
    
    (41,162
    )Equity in income of unconsolidated
joint ventures
    
    
    1,724
    
    
    
    1,184
    
    
    
    3,152
    
    
    
    2,303Net income
    
    $
    14,680
    
    
    $
    12,960
    
    
    $
    33,169
    
    
    $
    32,543
 15




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##### Table of Contents



GGP/Homart IIThree months ended
    
    
    Six months endedJune 30,
    
    
    June 30,(In thousands)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Revenues:Minimum rents
    
    $
    48,136
    
    
    $
    47,302
    
    
    $
    100,670
    
    
    $
    93,259Tenant recoveries
    
    
    22,642
    
    
    
    22,335
    
    
    
    46,233
    
    
    
    45,425Overage rents
    
    
    523
    
    
    
    559
    
    
    
    1,592
    
    
    
    1,594Other
    
    
    1,646
    
    
    
    2,584
    
    
    
    3,648
    
    
    
    3,925Total revenues
    
    
    72,947
    
    
    
    72,780
    
    
    
    152,143
    
    
    
    144,203Expenses:Real estate taxes
    
    
    7,471
    
    
    
    6,436
    
    
    
    14,919
    
    
    
    13,737Repairs and maintenance
    
    
    4,485
    
    
    
    4,565
    
    
    
    8,968
    
    
    
    9,292Marketing
    
    
    1,757
    
    
    
    2,490
    
    
    
    3,796
    
    
    
    4,867Other property operating costs
    
    
    9,090
    
    
    
    6,059
    
    
    
    17,702
    
    
    
    14,087Provision for doubtful accounts
    
    
    258
    
    
    
    466
    
    
    
    338
    
    
    
    1,077Property management and other costs
    
    
    4,591
    
    
    
    4,282
    
    
    
    9,385
    
    
    
    8,370General and administrative
    
    
    769
    
    
    
    773
    
    
    
    2,433
    
    
    
    967Depreciation and amortization
    
    
    16,128
    
    
    
    15,151
    
    
    
    31,638
    
    
    
    30,176Total expenses
    
    
    44,549
    
    
    
    40,222
    
    
    
    89,179
    
    
    
    82,573Operating income
    
    
    28,398
    
    
    
    32,558
    
    
    
    62,964
    
    
    
    61,630Interest income
    
    
    1,971
    
    
    
    674
    
    
    
    4,843
    
    
    
    1,152Interest expense
    
    
    (20,721
    )
    
    
    (17,558
    )
    
    
    (40,833
    )
    
    
    (33,870
    )Net income
    
    $
    9,648
    
    
    $
    15,674
    
    
    $
    26,974
    
    
    $
    28,912
 16




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##### Table of Contents



GGP/TeachersThree months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(In thousands)Revenues:Minimum rents
    
    $
    26,652
    
    
    $
    20,048
    
    
    $
    52,303
    
    
    $
    40,908Tenant recoveries
    
    
    11,857
    
    
    
    9,558
    
    
    
    22,705
    
    
    
    19,137Overage rents
    
    
    533
    
    
    
    8
    
    
    
    1,127
    
    
    
    74Other
    
    
    559
    
    
    
    547
    
    
    
    1,077
    
    
    
    1,017Total revenues
    
    
    39,601
    
    
    
    30,161
    
    
    
    77,212
    
    
    
    61,136Expenses:Real estate taxes
    
    
    2,945
    
    
    
    2,787
    
    
    
    5,859
    
    
    
    5,536Repairs and maintenance
    
    
    1,924
    
    
    
    1,498
    
    
    
    3,817
    
    
    
    3,314Marketing
    
    
    843
    
    
    
    925
    
    
    
    1,881
    
    
    
    1,781Other property operating costs
    
    
    4,750
    
    
    
    3,959
    
    
    
    9,454
    
    
    
    7,808Provision for doubtful accounts
    
    
    336
    
    
    
    117
    
    
    
    228
    
    
    
    179Property management and other costs
    
    
    2,178
    
    
    
    1,674
    
    
    
    4,342
    
    
    
    3,324General and administrative
    
    
    17
    
    
    
    39
    
    
    
    16
    
    
    
    74Depreciation and amortization
    
    
    6,298
    
    
    
    5,177
    
    
    
    13,758
    
    
    
    10,325Total expenses
    
    
    19,291
    
    
    
    16,176
    
    
    
    39,355
    
    
    
    32,341Operating income
    
    
    20,310
    
    
    
    13,985
    
    
    
    37,857
    
    
    
    28,795Interest income
    
    
    243
    
    
    
    168
    
    
    
    428
    
    
    
    304Interest expense
    
    
    (10,592
    )
    
    
    (5,332
    )
    
    
    (20,979
    )
    
    
    (10,125
    )Net income
    
    $
    9,961
    
    
    $
    8,821
    
    
    $
    17,306
    
    
    $
    18,974
 NOTE 4 MORTGAGE NOTES AND OTHER PROPERTY DEBT PAYABLE
  June 30,
    
    
    December 31,(In thousands)
    
    2006
    
    
    2005Fixed-rate debt:Commercial mortgage-backed securities
    
    $
    1,216,360
    
    
    $
    1,181,895Other collateralized mortgage notes and other debt payable
    
    
    11,597,528
    
    
    
    11,092,544Corporate and other unsecured term loans
    
    
    2,392,707
    
    
    
    1,631,257Total fixed-rate debt
    
    
    15,206,595
    
    
    
    13,905,696Variable-rate debt:Commercial mortgage-backed securities
    
    
    304,322
    
    
    
    306,270Other collateralized mortgage notes and other debt payable
    
    
    635,019
    
    
    
    888,842Credit facilities
    
    
    1,000
    
    
    
    180,500Corporate and other unsecured term loans
    
    
    4,548,200
    
    
    
    5,137,567Total variable-rate debt
    
    
    5,488,541
    
    
    
    6,513,179Total
    
    $
    20,695,136
    
    
    $
    20,418,875
  17




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Commercial Mortgage-Backed Securities
  Outstanding Balance
    
    Number of Collateralized PropertiesConsolidated
    
    Unconsolidated
    
    Consolidated
    
    Unconsolidated(Dollars in millions)GGP MPTC
    
    $
    651.9
    
    
    $
    252.1
    
    
    
    5
    
    
    
    4CMBS 13
    
    
    868.8
    
    
    
    138.6
    
    
    
    11
    
    
    
    2
  Other Collateralized Mortgage Notes and Other Property Debt Payable
   Corporate and Other Unsecured Term Loans
    18




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19




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##### Table of Contents



Unsecured Term Loans
   Interest Rate Swaps
  GGP
    
    2006 Credit
    
    PropertyMPTC
    
    Agreement
    
    SpecificTotal notional amount (in millions)
    
    $
    25.0
    
    
    $
    350.0
    
    
    $
    195.0Average fixed pay rate
    
    
    4.59
    %
    
    
    3.43
    %
    
    
    4.78
    %Average variable receive rate
    
    LIBOR
    
    LIBOR
    
    LIBOR
  Letters of Credit and Surety Bonds
  NOTE 5 COMMITMENTS AND CONTINGENCIES
   20




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21




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NOTE 6 DISCONTINUED OPERATIONS AND GAINS ON DISPOSITIONS OF INTERESTS IN OPERATING PROPERTIES
    Three Months
    
    Six MonthsEnded
    
    EndedJune 30,
    
    June 30,(In thousands)
    
    2005
    
    2005Revenues
    
    $
    5,863
    
    
    $
    11,685Income before minority interest
    
    
    2,173
    
    
    
    4059
 NOTE 7 OTHER ASSETS & LIABILITIES
  June 30,
    
    
    December 31,(In thousands)
    
    2006
    
    
    2005Below-market ground leases
    
    $
    283,736
    
    
    $
    349,788Receivables-finance leases and bonds
    
    
    114,154
    
    
    
    136,410Security and escrow deposits
    
    
    104,213
    
    
    
    87,126Real estate tax stabilization agreement
    
    
    85,048
    
    
    
    87,188Special Improvement District receivable
    
    
    70,365
    
    
    
    66,206Above-market tenant leases
    
    
    65,056
    
    
    
    77,094Prepaid expenses
    
    
    23,541
    
    
    
    29,884Funded defined contribution plan assets
    
    
    16,387
    
    
    
    20,062Other
    
    
    60,930
    
    
    
    66,611$
    823,430
    
    
    $
    920,369
 22




---



##### Table of Contents



(In thousands)
    
    2006
    
    
    2005Accounts payable and accrued expenses
    
    $
    582,896
    
    
    $
    594,876Below-market tenant leases
    
    
    149,882
    
    
    
    182,270Hughes participation payable
    
    
    74,765
    
    
    
    61,783Deferred gains/income
    
    
    54,351
    
    
    
    38,736Capital lease obligations
    
    
    18,010
    
    
    
    19,206Insurance reserves
    
    
    16,628
    
    
    
    24,287Other
    
    
    106,448
    
    
    
    111,256$
    1,002,980
    
    
    $
    1,032,414
 NOTE 8 RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
     23




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NOTE 9 STOCKBASED COMPENSATION PLANS
 Incentive Stock Plans
  24




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WeightedAverageExerciseShares
    
    
    PriceStock
options outstanding at December 31, 2005
    
    
    2,546,174
    
    
    $
    29.57Granted
    
    
    1,270,000
    
    
    
    49.98Exercised
    
    
    (453,226
    )
    
    
    27.03Exchanged for restricted stock
    
    
    (30,000
    )
    
    
    47.26Forfeited
    
    
    (145,000
    )
    
    
    43.10Expired
    
    
    (600
    )
    
    
    9.90Stock
options outstanding at June 30, 2006
    
    
    3,187,348
    
    
    $
    37.28
 Stock Options Outstanding
    
    
    Stock Options ExercisableWeighted
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    
    
    
    
    AverageRemaining
    
    
    Weighted
    
    
    
    
    
    
    Remaining
    
    
    WeightedContractual
    
    
    Average
    
    
    
    
    
    
    Contractual
    
    
    AverageTerm
    
    
    Exercise
    
    
    
    
    
    
    Term
    
    
    ExerciseRange of Exercise Prices
    
    Shares
    
    
    (in years)
    
    
    Price
    
    
    Shares
    
    
    (in years)
    
    
    PriceIn-the-money stock options$5.05 - $10.09
    
    
    6,000
    
    
    
    3.8
    
    
    $
    9.99
    
    
    
    6,000
    
    
    
    3.8
    
    
    $
    9.99$10.09 - $15.14
    
    
    84,700
    
    
    
    5.7
    
    
    
    13.58
    
    
    
    84,700
    
    
    
    5.7
    
    
    
    13.58$15.14 - $20.19
    
    
    337,148
    
    
    
    6.5
    
    
    
    16.75
    
    
    
    103,148
    
    
    
    6.7
    
    
    
    16.77$30.28 - $35.33
    
    
    612,500
    
    
    
    3.2
    
    
    
    30.98
    
    
    
    298,500
    
    
    
    3.2
    
    
    
    31.03$35.33 - $40.38
    
    
    972,000
    
    
    
    3.6
    
    
    
    35.61
    
    
    
    292,000
    
    
    
    3.6
    
    
    
    35.55$40.38 - $45.06
    
    
    50,000
    
    
    
    4.3
    
    
    
    44.59
    
    
    
    
    
    
    
    
    
    
    
    Anti-dilutive stock options$45.06 - $50.47
    
    
    1,125,000
    
    
    
    4.5
    
    
    
    49.91
    
    
    
    205,000
    
    
    
    4.5
    
    
    
    49.67Total
    
    
    3,187,348
    
    
    
    4.4
    
    
    $
    37.28
    
    
    
    989,348
    
    
    
    4.3
    
    
    $
    33.12Intrinsic value (in thousands)
    
    $
    24,798
    
    
    
    
    
    
    
    
    
    
    $
    11,813
   Restricted Stock
  25




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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 June 30, 2006
    
    
    72,666
    
    
    $
    47.62Intrinsic value (in thousands)
    
    $
    3,274
  Threshold-Vesting Stock Options
   TSO Grant Year2006
    
    
    2005TSOs outstanding at December 31, 2005
    
    
    
    
    
    
    1,000,000Granted
    
    
    1,400,000
    
    
    
    Forfeited
    
    
    (62,824
    )
    
    
    (104,682
    )TSOs outstanding at June 30, 2006
    
    
    1,337,176
    
    
    
    895,318Intrinsic value (in thousands)
    
    
    
    
    
    $
    8,640Exercise price
    
    $
    50.47
    
    
    $
    35.41Threshold price
    
    
    70.79
    
    
    
    49.66Fair value of options on grant date
    
    
    6.51
    
    
    
    3.81Remaining contractual term (in years)
    
    
    4.6
    
    
    
    3.6
  26




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##### Table of Contents



Other Required Disclosures
  Risk-free interest rate
    
    
    4.43
    %Dividend yield
    
    
    4.00Expected volatitity
    
    
    22.94Expected life (in years)
    
    
    2.5 - 3.5
    Employee Stock Purchase Plan
  27




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##### Table of Contents



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
   28




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##### Table of Contents



Three Months Ended June 30, 2006(In thousands)
    
    Consolidated
    
    
    Unconsolidated
    
    
    SegmentRetail
and Other
    
    Properties
    
    
    Properties
    
    
    BasisProperty revenues:Minimum rents
    
    $
    425,052
    
    
    $
    103,851
    
    
    $
    528,903Tenant recoveries
    
    
    190,733
    
    
    
    45,886
    
    
    
    236,619Overage rents
    
    
    8,603
    
    
    
    1,387
    
    
    
    9,990Other, including minority interest
    
    
    23,282
    
    
    
    20,312
    
    
    
    43,594Total property revenues
    
    
    647,670
    
    
    
    171,436
    
    
    
    819,106Property operating expenses:Real estate taxes
    
    
    54,551
    
    
    
    14,643
    
    
    
    69,194Repairs and maintenance
    
    
    48,762
    
    
    
    11,536
    
    
    
    60,298Marketing
    
    
    11,639
    
    
    
    2,958
    
    
    
    14,597Other property operating costs
    
    
    90,412
    
    
    
    34,821
    
    
    
    125,233Provision for doubtful accounts
    
    
    7,106
    
    
    
    817
    
    
    
    7,923Total property operating expenses
    
    
    212,470
    
    
    
    64,775
    
    
    
    277,245Retail and other net operating income
    
    
    435,200
    
    
    
    106,661
    
    
    
    541,861Master Planned CommunitiesLand sales
    
    
    33,035
    
    
    
    20,250
    
    
    
    53,285Land sales operations
    
    
    (25,102
    )
    
    
    (15,531
    )
    
    
    (40,633
    )Master Planned Communities net operating income
    
    
    7,933
    
    
    
    4,719
    
    
    
    12,652Real estate property net operating income
    
    $
    443,133
    
    
    $
    111,380
    
    
    $
    554,513
 Three Months Ended June 30, 2005(In thousands)
    
    Consolidated
    
    
    Unconsolidated
    
    
    SegmentRetail
and Other
    
    Properties
    
    
    Properties
    
    
    BasisProperty revenues:Minimum rents
    
    $
    404,663
    
    
    $
    93,046
    
    
    $
    497,709Tenant recoveries
    
    
    183,045
    
    
    
    43,688
    
    
    
    226,733Overage rents
    
    
    9,706
    
    
    
    1,127
    
    
    
    10,833Other, including minority interest
    
    
    25,927
    
    
    
    19,484
    
    
    
    45,411Total property revenues
    
    
    623,341
    
    
    
    157,345
    
    
    
    780,686Property operating expenses:Real estate taxes
    
    
    52,424
    
    
    
    13,627
    
    
    
    66,051Repairs and maintenance
    
    
    45,813
    
    
    
    9,935
    
    
    
    55,748Marketing
    
    
    14,399
    
    
    
    3,547
    
    
    
    17,946Other property operating costs
    
    
    93,319
    
    
    
    33,078
    
    
    
    126,397Provision for doubtful accounts
    
    
    4,165
    
    
    
    672
    
    
    
    4,837Total property operating expenses
    
    
    210,120
    
    
    
    60,859
    
    
    
    270,979Retail and other net operating income
    
    
    413,221
    
    
    
    96,486
    
    
    
    509,707Master Planned CommunitiesLand sales
    
    
    114,157
    
    
    
    28,655
    
    
    
    142,812Land sales operations
    
    
    (94,181
    )
    
    
    (18,930
    )
    
    
    (113,111
    )Master Planned Communities net operating income
    
    
    19,976
    
    
    
    9,725
    
    
    
    29,701Real estate property net operating income
    
    $
    433,197
    
    
    $
    106,211
    
    
    $
    539,408
 29




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##### Table of Contents



Six Months Ended June 30, 2006(In thousands)
    
    Consolidated
    
    
    Unconsolidated
    
    
    SegmentRetail
and Other
    
    Properties
    
    
    Properties
    
    
    BasisProperty revenues:Minimum rents
    
    $
    862,784
    
    
    $
    209,182
    
    
    $
    1,071,966Tenant recoveries
    
    
    376,176
    
    
    
    92,453
    
    
    
    468,629Overage rents
    
    
    22,829
    
    
    
    3,735
    
    
    
    26,564Other, including minority interest
    
    
    44,648
    
    
    
    42,476
    
    
    
    87,124Total property revenues
    
    
    1,306,437
    
    
    
    347,846
    
    
    
    1,654,283Property operating expenses:Real estate taxes
    
    
    109,515
    
    
    
    29,509
    
    
    
    139,024Repairs and maintenance
    
    
    95,817
    
    
    
    22,091
    
    
    
    117,908Marketing
    
    
    23,669
    
    
    
    6,464
    
    
    
    30,133Other property operating costs
    
    
    176,860
    
    
    
    72,885
    
    
    
    249,745Provision for doubtful accounts
    
    
    13,319
    
    
    
    952
    
    
    
    14,271Total property operating expenses
    
    
    419,180
    
    
    
    131,901
    
    
    
    551,081Retail and other net operating income
    
    
    887,257
    
    
    
    215,945
    
    
    
    1,103,202Master Planned CommunitiesLand sales
    
    
    170,255
    
    
    
    38,799
    
    
    
    209,054Land sales operations
    
    
    (123,699
    )
    
    
    (27,950
    )
    
    
    (151,649
    )Master Planned Communities net operating income
    
    
    46,556
    
    
    
    10,849
    
    
    
    57,405Real estate property net operating income
    
    $
    933,813
    
    
    $
    226,794
    
    
    $
    1,160,607
 Six Months Ended June 30, 2005(In thousands)
    
    Consolidated
    
    
    Unconsolidated
    
    
    SegmentRetail
and Other
    
    Properties
    
    
    Properties
    
    
    BasisProperty revenues:Minimum rents
    
    $
    810,497
    
    
    $
    189,341
    
    
    $
    999,838Tenant recoveries
    
    
    368,102
    
    
    
    86,924
    
    
    
    455,026Overage rents
    
    
    23,312
    
    
    
    2,849
    
    
    
    26,161Other, including minority interest
    
    
    49,992
    
    
    
    35,050
    
    
    
    85,042Total property revenues
    
    
    1,251,903
    
    
    
    314,164
    
    
    
    1,566,067Property operating expenses:Real estate taxes
    
    
    105,614
    
    
    
    27,196
    
    
    
    132,810Repairs and maintenance
    
    
    94,249
    
    
    
    20,567
    
    
    
    114,816Marketing
    
    
    28,350
    
    
    
    6,995
    
    
    
    35,345Other property operating costs
    
    
    186,242
    
    
    
    62,928
    
    
    
    249,170Provision for doubtful accounts
    
    
    8,361
    
    
    
    1,719
    
    
    
    10,080Total property operating expenses
    
    
    422,816
    
    
    
    119,405
    
    
    
    542,221Retail and other net operating income
    
    
    829,087
    
    
    
    194,759
    
    
    
    1,023,846Master Planned CommunitiesLand sales
    
    
    175,407
    
    
    
    37,223
    
    
    
    212,630Land sales operations
    
    
    (147,991
    )
    
    
    (24,590
    )
    
    
    (172,581
    )Master Planned Communities net operating income
    
    
    27,416
    
    
    
    12,633
    
    
    
    40,049Real estate property net operating income
    
    $
    856,503
    
    
    $
    207,392
    
    
    $
    1,063,895
 30




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##### Table of Contents



Three Months Ended
    
    
    Six Months Ended(In thousands)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Real estate property net operating income
    
    $
    554,513
    
    
    $
    539,408
    
    
    $
    1,160,607
    
    
    $
    1,063,895Unconsolidated Properties NOI
    
    
    (111,380
    )
    
    
    (106,211
    )
    
    
    (226,794
    )
    
    
    (207,392
    )Consolidated Properties NOI
    
    
    443,133
    
    
    
    433,197
    
    
    
    933,813
    
    
    
    856,503Management and other fees
    
    
    24,650
    
    
    
    22,780
    
    
    
    53,362
    
    
    
    41,135Property management and other costs
    
    
    (45,285
    )
    
    
    (42,956
    )
    
    
    (91,945
    )
    
    
    (77,892
    )General and administrative
    
    
    (3,132
    )
    
    
    (3,635
    )
    
    
    (6,691
    )
    
    
    (6,446
    )Depreciation and amortization
    
    
    (178,372
    )
    
    
    (171,902
    )
    
    
    (343,718
    )
    
    
    (333,626
    )Discontinued operations and minority
interest in consolidated NOI
    
    
    4,454
    
    
    
    (2,048
    )
    
    
    8,374
    
    
    
    (3,758
    )Operating income
    
    
    245,448
    
    
    
    235,436
    
    
    
    553,195
    
    
    
    475,916Interest income
    
    
    1,469
    
    
    
    3,403
    
    
    
    4,690
    
    
    
    4,443Interest expense
    
    
    (278,611
    )
    
    
    (244,529
    )
    
    
    (557,404
    )
    
    
    (489,803
    )Provision for income taxes
    
    
    (14,490
    )
    
    
    (15,359
    )
    
    
    (40,894
    )
    
    
    (14,093
    )Minority interest
    
    
    (638
    )
    
    
    (7,714
    )
    
    
    (11,862
    )
    
    
    (20,378
    )Equity in income of unconsolidated affiliates
    
    
    21,009
    
    
    
    29,647
    
    
    
    49,476
    
    
    
    56,336Income (loss) from continuing operations
    
    $
    (25,813
    )
    
    $
    884
    
    
    $
    (2,799
    )
    
    $
    12,421
  Three Months Ended
    
    
    Six Months Ended(In thousands)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Segment basis total property revenues
    
    $
    819,106
    
    
    $
    780,686
    
    
    $
    1,654,283
    
    
    $
    1,566,067Unconsolidated segment revenues
    
    
    (171,436
    )
    
    
    (157,345
    )
    
    
    (347,846
    )
    
    
    (314,164
    )Land sales
    
    
    33,035
    
    
    
    114,157
    
    
    
    170,255
    
    
    
    175,407Management and other fees, net of discontinued operations
    
    
    24,650
    
    
    
    22,780
    
    
    
    53,362
    
    
    
    41,135Real estate net operating income attributable to
minority interests, net of discontinued operations
    
    
    4,454
    
    
    
    (2,048
    )
    
    
    8,374
    
    
    
    (3,758
    )GAAP-basis consolidated total revenues
    
    $
    709,809
    
    
    $
    758,230
    
    
    $
    1,538,428
    
    
    $
    1,464,687
 31




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 10-K.
 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
    
    Future federal income taxes
    
    Expected sales in our Master Planned Communities segment
   32




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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. The average annual new/renewal lease rate for our Consolidated Retail
Properties for the first half of 2006 was $35.43 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 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 91.2 percent at June 30, 2006, compared to 90.7 percent at June 30, 2005.
    
    Increased tenant sales in which we participate through overage rents. In the first half
of 2006, tenant sales per square foot in our Retail Company Portfolio increased 6.0 percent
over 2005 to $448 per square foot.
 
 33




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##### Table of Contents



Consolidated
    
    Unconsolidated
    
    RetailRetail
    
    Retail
    
    CompanyProperties
    
    Properties
    
    PortfolioOperating Statistics (a)Occupancy
    
    
    91.1
    %
    
    
    91.6
    %
    
    
    91.2
    %Trailing 12 month total tenant sales per sq. ft. (b)
    
    $
    438
    
    
    $
    469
    
    
    $
    448% change in total sales (b)
    
    
    6.5
    %
    
    
    5.2
    %
    
    
    6.0
    %% change in comparable sales (b)
    
    
    2.7
    
    
    
    2.7
    
    
    
    2.7Mall and freestanding GLA (in sq. ft.)
    
    
    40,889,137
    
    
    
    18,268,650
    
    
    
    59,157,787Certain Financial InformationAverage
annualized in place rent per sq. ft.
    
    $
    33.65
    
    
    $
    36.63Average rent per sq. ft. for new/renewal leases
    
    
    35.43
    
    
    
    39.10Average rent per sq. ft. for lease expiring in 2006
    
    
    29.64
    
    
    
    36.64
 
 (a)
    
    Excludes properties at which significant physical or mershandising changes have been made and miscellaneous (non-mall) properties.(b)
    
    Due to tenant sales reporting timelines, data presented is as of May 31,2006.   
    
    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
     34




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##### Table of Contents



Overview  Master Planned Communities Segment
  SEASONALITY
  CRITICAL ACCOUNTING POLICIES
  RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2006 AND 2005
 General
  35




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##### Table of Contents



Retail and Other Segment
  Three Months EndedJune 30,2006
    
    
    2005
    
    
    $ Change
    
    
    % Change(Dollars in thousands)Property revenues:Minimum rents
    
    $
    528,903
    
    
    $
    497,709
    
    
    $
    31,194
    
    
    
    6.3
    %Tenant recoveries
    
    
    236,619
    
    
    
    226,733
    
    
    
    9,886
    
    
    
    4.4Overage rents
    
    
    9,990
    
    
    
    10,833
    
    
    
    (843
    )
    
    
    (7.8
    )Other
    
    
    43,594
    
    
    
    45,411
    
    
    
    (1,817
    )
    
    
    (4.0
    )Total property revenues
    
    
    819,106
    
    
    
    780,686
    
    
    
    38,420
    
    
    
    4.9Property operating expenses:Real estate taxes
    
    
    69,194
    
    
    
    66,051
    
    
    
    3,143
    
    
    
    4.8Repairs and maintenance
    
    
    60,298
    
    
    
    55,748
    
    
    
    4,550
    
    
    
    8.2Marketing
    
    
    14,597
    
    
    
    17,946
    
    
    
    (3,349
    )
    
    
    (18.7
    )Other property operating costs
    
    
    125,233
    
    
    
    126,397
    
    
    
    (1,164
    )
    
    
    (0.9
    )Provision for doubtful accounts
    
    
    7,923
    
    
    
    4,837
    
    
    
    3,086
    
    
    
    63.8Total property operating expenses
    
    
    277,245
    
    
    
    270,979
    
    
    
    6,266
    
    
    
    2.3Real estate property net operating income
    
    $
    541,861
    
    
    $
    509,707
    
    
    $
    32,154
    
    
    
    6.3
    %
  
    
    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, and Ala Moana Center which was recently redeveloped
    
    Higher permanent occupancy which increased 50 basis points
from June 30, 2005 to 91.2 percent at June 30, 2006
    
    Greater use of vacant space for temporary tenant rentals
    
    The acquisition of Whalers Village by one of our joint ventures
    
    Higher accretion of net below market tenant leases, due in part to the re-allocation of
TRCLP purchase price as discussed in Note 1
       36




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##### Table of Contents



Master Planned Communities Segment
 Three Months EndedJune 30,2006
    
    
    2005
    
    
    $ Change
    
    
    % Change(Dollars in thousands)Land sales
    
    $
    53,285
    
    
    $
    142,812
    
    
    $
    (89,527
    )
    
    
    (62.7
    )%Land sales operations
    
    
    (40,633
    )
    
    
    (113,111
    )
    
    
    72,478
    
    
    
    (64.1
    )Real estate property net operating income
    
    $
    12,652
    
    
    $
    29,701
    
    
    $
    (17,049
    )
    
    
    (57.4
    )%
  Certain Significant Consolidated Revenues and Expenses
 Three Months EndedJune 30,2006
    
    2005
    
    $ Change
    
    % Change(Dollars in thousands)Revenues:Tenant rents
    
    $
    624,388
    
    
    $
    597,414
    
    
    $
    26,974
    
    
    
    4.5
    %Land sales
    
    
    33,035
    
    
    
    114,157
    
    
    
    (81,122
    )
    
    
    (71.1
    )Management and other fees
    
    
    24,650
    
    
    
    22,780
    
    
    
    1,870
    
    
    
    8.2Expenses:Property operating expenses
    
    
    212,470
    
    
    
    210,120
    
    
    
    2,350
    
    
    
    1.1Land sales operations
    
    
    25,102
    
    
    
    94,181
    
    
    
    (69,079
    )
    
    
    (73.3
    )Property management and other costs
    
    
    45,285
    
    
    
    42,956
    
    
    
    2,329
    
    
    
    5.4Depreciation and amortization
    
    
    178,372
    
    
    
    171,902
    
    
    
    6,470
    
    
    
    3.8Interest expense
    
    
    278,611
    
    
    
    244,529
    
    
    
    34,082
    
    
    
    13.9Provision
for income taxes
    
    
    14,490
    
    
    
    15,359
    
    
    
    (869
    )
    
    
    (5.7
    )
  37




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##### Table of Contents




    
    Increase in interest rates both on new fixed-rate financings and variable-rate debt as a
result of increases in the LIBOR rate
    
    Higher outstanding debt balances
    
    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). In the second quarter of 2005, we revised the estimated mark-to-market
adjustments on the debt acquired in the TRC Merger. As a result, interest expense in 2005
includes $5.3 million related to prior periods. Additionally, this amortization is reduced
as debt is repaid and refinanced.
   RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
 Retail and Other Segment
  Six Months EndedJune 30,2006
    
    
    2005
    
    
    $ Change
    
    
    % Change(Dollars in thousands)Property revenues:Minimum rents
    
    $
    1,071,966
    
    
    $
    999,838
    
    
    $
    72,128
    
    
    
    7.2
    %Tenant recoveries
    
    
    468,629
    
    
    
    455,026
    
    
    
    13,603
    
    
    
    3.0Overage rents
    
    
    26,564
    
    
    
    26,161
    
    
    
    403
    
    
    
    1.5Other
    
    
    87,124
    
    
    
    85,042
    
    
    
    2,082
    
    
    
    2.4Total property revenues
    
    
    1,654,283
    
    
    
    1,566,067
    
    
    
    88,216
    
    
    
    5.6Property operating expenses:Real estate taxes
    
    
    139,024
    
    
    
    132,810
    
    
    
    6,214
    
    
    
    4.7Repairs and maintenance
    
    
    117,908
    
    
    
    114,816
    
    
    
    3,092
    
    
    
    2.7Marketing
    
    
    30,133
    
    
    
    35,345
    
    
    
    (5,212
    )
    
    
    (14.7
    )Other property operating costs
    
    
    249,745
    
    
    
    249,170
    
    
    
    575
    
    
    
    0.2Provision for doubtful accounts
    
    
    14,271
    
    
    
    10,080
    
    
    
    4,191
    
    
    
    41.6Total property operating expenses
    
    
    551,081
    
    
    
    542,221
    
    
    
    8,860
    
    
    
    1.6Real estate property net operating income
    
    $
    1,103,202
    
    
    $
    1,023,846
    
    
    $
    79,356
    
    
    
    7.8
    %
 38




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##### Table of Contents



Master Planned Communities Segment
 Six Months EndedJune 30,2006
    
    
    2005
    
    
    $ Change
    
    
    % Change(Dollars in thousands)Land sales
    
    $
    209,054
    
    
    $
    212,630
    
    
    $
    (3,576
    )
    
    
    (1.7
    )%Land sales operations
    
    
    (151,649
    )
    
    
    (172,581
    )
    
    
    20,932
    
    
    
    (12.1
    )Real estate property net operating income
    
    $
    57,405
    
    
    $
    40,049
    
    
    $
    17,356
    
    
    
    43.3
    %
  Certain Significant Consolidated Revenues and Expenses
 Six Months EndedJune 30,2006
    
    2005
    
    $ Change
    
    % Change(Dollars in thousands)Revenues:Tenant rents
    
    $
    1,261,789
    
    
    $
    1,201,911
    
    
    $
    59,878
    
    
    
    5.0
    %Land sales
    
    
    170,255
    
    
    
    175,407
    
    
    
    (5,152
    )
    
    
    (2.9
    )Management and other fees
    
    
    53,362
    
    
    
    41,135
    
    
    
    12,227
    
    
    
    29.7Expenses:Property operating expenses
    
    
    419,180
    
    
    
    422,816
    
    
    
    (3,636
    )
    
    
    (0.9
    )Land sales operations
    
    
    123,699
    
    
    
    147,991
    
    
    
    (24,292
    )
    
    
    (16.4
    )Property management and other costs
    
    
    91,945
    
    
    
    77,892
    
    
    
    14,053
    
    
    
    18.0Depreciation and amortization
    
    
    343,718
    
    
    
    333,626
    
    
    
    10,092
    
    
    
    3.0Interest expense
    
    
    557,404
    
    
    
    489,803
    
    
    
    67,601
    
    
    
    13.8Provision for income taxes
    
    
    40,894
    
    
    
    14,093
    
    
    
    26,801
    
    
    
    190.2
   39




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LIQUIDITY AND CAPITAL RESOURCES
 Cash Flows from Operating Activities
   Cash Flows from Investing Activities
   Cash Flows from Financing Activities
  40




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##### Table of Contents



June 30,
    
    
    December 31,(In millions)
    
    2006
    
    
    2005Consolidated:Fixed-rate debt
    
    $
    15,777
    
    
    $
    14,789Variable-rate debt:Corporate and other unsecured
    
    
    4,198
    
    
    
    4,875Other variable-rate debt
    
    
    720
    
    
    
    755Total variable-rate debt
    
    
    4,918
    
    
    
    5,630Total consolidated
    
    $
    20,695
    
    
    $
    20,419Weighted-average interest rate
    
    
    5.78
    %
    
    
    5.64
    %Unconsolidated:Fixed-rate debt
    
    $
    2,862
    
    
    $
    2,788Variable-rate debt
    
    
    544
    
    
    
    455Total Unconsolidated Real Estate Affiliates
    
    $
    3,406
    
    
    $
    3,243Weighted-average interest rate
    
    
    5.64
    %
    
    
    5.56
    %
       41




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##### Table of Contents



Contractual Cash Obligations and Commitments
  (In thousands)2006
    
    $
    2,066,5082007
    
    
    1,413,8742008
    
    
    2,166,7312009
    
    
    3,026,3422010
    
    
    6,662,417Subsequent
    
    
    5,230,674Total
    
    $
    20,566,546
 42




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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
 43




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##### Table of Contents



RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  (In millions)
    
    Consolidated
    
    
    UnconsolidatedVariable rate:Subject to interest rate swaps
    
    $
    570
    
    
    $
    125Not subject to interest rate swaps
    
    
    4,918
    
    
    
    544Total
    
    
    5,488
    
    
    
    669Fixed rate
    
    
    15,207
    
    
    
    2,737Total
    
    $
    20,695
    
    
    $
    3,406
  
 ITEM 4. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
  Material Weaknesses Previously Disclosed
  44




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##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  
 ITEM 2. UNREGISTERED SALES OF 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
    
    
    ProgramsMay 11 - 31, 2006
    
    
    818,500
    
    
    $
    44.13
    
    
    
    818,500
    
    
    $
    163,880,427June 8 - 28, 2006
    
    
    397,700
    
    
    
    43.36
    
    
    
    397,700
    
    
    
    146,636,772Total
    
    
    1,216,200
    
    
    $
    43.88
    
    
    
    1,216,200
    
    
    $
    146,636,772
 
 (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. 45




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##### Table of Contents



ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  Number ofMatter
    
    Shares For
    
    Withheld1.
    
    (a) Election of Adam Metz
    
    
    214,189,701
    
    
    
    1,752,988(b) Election of Robert Michaels
    
    
    211,046,653
    
    
    
    4,896,036(c) Election of Thomas Nolan
    
    
    209,729,245
    
    
    
    6,213,444(d) Election of John Riordan
    
    
    209,224,640
    
    
    
    6,718,049
  Number of
    
    NumberNumber of
    
    Shares
    
    of Shares
    
    Broker NonMatter
    
    Shares For
    
    Against
    
    Abstain
    
    -Votes2. Amendment to the
Companys 2003
Incentive Stock
Plan to provide for
an annual award of
1,500 shares of
restricted stock to
non-employee
directors (in lieu
of an annual grant
of stock options)
and to permit all
issuances under the
plan to be effected
electronically
    
    
    189,179,515
    
    
    
    5,792,984
    
    
    
    268,171
    
    
    
    20,702,019
 Number of
    
    NumberNumber of
    
    Shares
    
    of Shares
    
    Broker NonMatter
    
    Shares For
    
    Against
    
    Abstain
    
    -Votes3. Ratification of
the selection of
Deloitte & Touche
LLP as the
Companys
independent
auditors for the
year ending
December 31, 2006
    
    
    215,265,538
    
    
    
    525,091
    
    
    
    152,058
    
    
    
    0
 46




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##### Table of Contents



ITEM 5. OTHER INFORMATION
  TRCLP
 June 30,
    
    
    December 31,2006
    
    
    2005(In thousands)AssetsInvestment in real estate:Land
    
    $
    1,326,677
    
    
    $
    1,263,288Buildings and equipment
    
    
    8,412,890
    
    
    
    8,370,635Less accumulated depreciation
    
    
    (521,376
    )
    
    
    (357,859
    )Developments in progress
    
    
    217,390
    
    
    
    203,027Net property and equipment
    
    
    9,435,581
    
    
    
    9,479,091Investment in and loans to/from Unconsolidated Real Estate
Affiliates
    
    
    1,171,876
    
    
    
    1,192,976Investment land and land held for development and sale
    
    
    1,683,569
    
    
    
    1,651,063Net investment in real estate
    
    
    12,291,026
    
    
    
    12,323,130Cash and cash equivalents
    
    
    40,962
    
    
    
    73,374Accounts and notes receivable, net
    
    
    81,062
    
    
    
    88,142Insurance recovery receivable
    
    
    52,082
    
    
    
    63,382Goodwill
    
    
    361,897
    
    
    
    420,624Deferred expenses, net
    
    
    68,308
    
    
    
    51,607Prepaid expenses and other assets
    
    
    719,927
    
    
    
    814,872Total assets
    
    $
    13,615,264
    
    
    $
    13,835,131Liabilities and Partners CapitalMortgage notes and other property debt payable
    
    $
    7,437,545
    
    
    $
    6,503,073Deferred tax liabilities
    
    
    1,249,086
    
    
    
    1,286,576Accounts payable, accrued expenses and other liabilities
    
    
    580,526
    
    
    
    591,679Total liabilities
    
    
    9,267,157
    
    
    
    8,381,328Commitments and contingencies
    
    
    
    
    
    
    Partners capital:Partners capital
    
    
    7,181,096
    
    
    
    7,191,001Accumulated other comprehensive income
    
    
    1,275
    
    
    
    877Total partners capital, before
receivable from General Growth Properties, Inc.
    
    
    7,182,371
    
    
    
    7,191,878Receivable from General Growth Properties, Inc.
    
    
    (2,834,264
    )
    
    
    (1,738,075
    )Total partners capital
    
    
    4,348,107
    
    
    
    5,453,803Total liabilities and partners capital
    
    $
    13,615,264
    
    
    $
    13,835,131
 47




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##### Table of Contents



TRCLP
 Six Months EndedJune 30,2006
    
    
    2005(In thousands)Revenues:Minimum rents
    
    $
    322,928
    
    
    $
    298,386Tenant recoveries
    
    
    137,634
    
    
    
    134,784Overage rents
    
    
    6,536
    
    
    
    6,147Land sales
    
    
    170,255
    
    
    
    175,407Management and other fees
    
    
    9,908
    
    
    
    5,918Other
    
    
    24,375
    
    
    
    21,884Total revenues
    
    
    671,636
    
    
    
    642,526Expenses:Real estate taxes
    
    
    42,161
    
    
    
    39,106Repairs and maintenance
    
    
    38,855
    
    
    
    38,394Marketing
    
    
    4,840
    
    
    
    5,992Other property operating costs
    
    
    74,158
    
    
    
    88,697Land sales operations
    
    
    123,699
    
    
    
    147,991Provision for doubtful accounts
    
    
    8,204
    
    
    
    4,264Property management and other costs
    
    
    38,618
    
    
    
    18,935Depreciation and amortization
    
    
    163,252
    
    
    
    160,119Total expenses
    
    
    493,787
    
    
    
    503,498Operating income
    
    
    177,849
    
    
    
    139,028Interest income
    
    
    2,326
    
    
    
    2,865Interest expense
    
    
    (164,275
    )
    
    
    (118,385
    )Income
before income taxes, minority interest
and equity in income of
unconsolidated real estate affiliates
    
    
    15,900
    
    
    
    23,508Provision for income taxes
    
    
    (35,315
    )
    
    
    (19,473
    )Minority interest
    
    
    (3,540
    )
    
    
    (1,987
    )Equity in income of unconsolidated real estate affiliates
    
    
    13,060
    
    
    
    9,238Income (loss) from continuing operations
    
    
    (9,895
    )
    
    
    11,286Income from discontinued operations
    
    
    
    
    
    
    4,058Net income (loss)
    
    $
    (9,895
    )
    
    $
    15,344Comprehensive income (loss), net:Net income (loss)
    
    $
    (9,895
    )
    
    $
    15,344Other comprehensive income:Net unrealized gains (losses) on financial instruments
    
    
    (870
    )
    
    
    374Unrealized gains on available-for-sale securities
    
    
    1,268
    
    
    
    90Comprehensive income (loss), net
    
    $
    (9,497
    )
    
    $
    15,808
 48




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##### Table of Contents



TRCLP
 Six Months EndedJune 30,2006
    
    
    2005(In thousands)Cash flows from operating activities:Net income (loss)
    
    $
    (9,895
    )
    
    $
    15,344Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Depreciation and amortization, including discontinued
operations
    
    
    165,074
    
    
    
    163,418Equity in income of unconsolidated real estate affiliates
    
    
    (13,060
    )
    
    
    (9,238
    )Operating distributions received from unconsolidated real
estate affiliates
    
    
    6,626
    
    
    
    9,238Losses (gains) on extinguishment of debt
    
    
    (3,143
    )
    
    
    238Participation expense pursuant to Contingent Stock
Agreement
    
    
    48,331
    
    
    
    51,687Land development and acquisition expenditures
    
    
    (95,281
    )
    
    
    (59,610
    )Cost of land sales
    
    
    61,630
    
    
    
    84,287Provision for doubtful accounts, including discontinued
operations
    
    
    8,204
    
    
    
    4,261Debt assumed by purchasers of land
    
    
    (4,698
    )
    
    
    (4,133
    )Proceeds from the sale of marketable securities
    
    
    4,307
    
    
    
    5,699Straight-line rent amortization
    
    
    (13,212
    )
    
    
    (9,559
    )Above and below market tenant lease amortization
    
    
    (4,798
    )
    
    
    (1,031
    )Other intangible amortization
    
    
    2,919
    
    
    
    5,819Amortization
of debt market rate adjustment
    
    
    (15,944
    )
    
    
    (25,945
    )Net changes:Accounts and notes receivable
    
    
    7,427
    
    
    
    (8,870
    )Other assets
    
    
    10,348
    
    
    
    20,945Accounts payable, accrued expenses, and
income taxes
    
    
    26,343
    
    
    
    244Other, net
    
    
    3,459
    
    
    
    163Net cash provided by operating activities
    
    
    184,637
    
    
    
    242,957Cash flows from investing activities:Acquisition/development of real estate and property
additions/improvements
    
    
    (59,114
    )
    
    
    (82,302
    )Proceeds from sale of property
    
    
    6,208
    
    
    
    Increase in investments in unconsolidated real estate
affiliates
    
    
    (6,309
    )
    
    
    (9,672
    )Distributions received from unconsolidated real estate
affiliates in excess of income
    
    
    22,207
    
    
    
    24,345Change in restricted cash
    
    
    (9,899
    )
    
    
    121Insurance recoveries
    
    
    13,400
    
    
    
    Other, net
    
    
    4,847
    
    
    
    3,755Net cash used in investing activities
    
    
    (28,660
    )
    
    
    (63,753
    )Cash flows from financing activities:Proceeds
from issuance of mortgage notes and other property debt payable
    
    
    1,743,000
    
    
    
    1,415,037Principal payments on mortgage notes and other property debt
payable
    
    
    (787,202
    )
    
    
    (724,886
    )Deferred financing costs
    
    
    (12,293
    )
    
    
    (2,150
    )Advances to General Growth Properties, Inc.
    
    
    (1,131,538
    )
    
    
    (855,402
    )Other, net
    
    
    (356
    )
    
    
    (5,728
    )Net cash used in financing activities
    
    
    (188,389
    )
    
    
    (173,129
    )Net change in cash and cash equivalents
    
    
    (32,412
    )
    
    
    6,075Cash and cash equivalents at beginning of period
    
    
    73,374
    
    
    
    30,196Cash and cash equivalents at end of period
    
    $
    40,962
    
    
    $
    36,271Supplemental disclosure of cash flow information:Interest paid
    
    $
    194,500
    
    
    $
    116,725Interest capitalized
    
    
    21,073
    
    
    
    25,309Income taxes paid
    
    
    10,276
    
    
    
    6,530
 49




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##### Table of Contents



MANAGEMENTS DISCUSSION OF TRCLP OPERATIONS AND LIQUIDITY
 Revenues
  Operating expenses
  Net income (loss)
  Cash position at June 30, 2006
  50




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##### Table of Contents



ITEM 6. EXHIBITS
 10.1
    
    General Growth Properties, Inc. 2003 Incentive Stock Plan, as amended.10.2
    
    Form of Employee Restricted Stock Agreement pursuant to the 2003 Incentive Stock Plan.10.3
    
    Form of Non-Employee Director Restricted Stock Agreement pursuant to the 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.
  51




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SIGNATURE
  GENERAL GROWTH PROPERTIES, INC.
(Registrant)Date: August 9, 2006
    
    by:
    
    /s/: Bernard FreibaumBernard FreibaumExecutive Vice President and Chief Financial Officer(On behalf of the Registrant and as Principal Accounting Officer)
 52




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EXHIBIT INDEX
 10.1
    
    General Growth Properties, Inc. 2003 Incentive Stock Plan, as amended.10.2
    
    Form of Employee Restricted Stock Agreement pursuant to the 2003 Incentive
Stock Plan.10.3
    
    Form of Non-Employee Director Restricted Stock Agreement pursuant to the 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.
  53