**EXHIBIT 99.2**

 

**FACTORSAFFECTING FUTURE OPERATING RESULTS**

 

Our Forms 10-Q, our Form 10-K, our AnnualReport to Shareholders and any Form 8-K of ours or any other written or oralstatements made by or on behalf of us may include forward-looking statements thatreflect our current views with respect to future events and financialperformance. These forward-looking statements are subject to certain risks anduncertainties, including, but not limited to, those discussed below that couldcause actual results to differ materially from historical results oranticipated results. The words “will,” “plan,” “believe,” “expect,”“anticipate,” “target,” and similar expressions identify forward-lookingstatements. Readers are cautioned not to place undue reliance on these forward-lookingstatements, which speak only as of their dates. We undertake no obligation topublicly update or revise any forward-looking statements, whether as a resultof new information, future events or otherwise. As a result of the risks anduncertainties attendant with the forward-looking statements and theirunderlying assumptions, investors should not rely upon our forward-lookingstatements as predictions of actual results. The following are among thefactors that could cause our actual results to differ materially fromhistorical results or anticipated results. In addition, various risks relatedto an investment in our common stock are described below.

 

**Risks Related to Our Business**

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**Our real property portfolio is affected byeconomic conditions, local real estate considerations and other factors**

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The revenues and cash flow generated by, andthe value of, our properties may be adversely affected by general economicconditions and local economic and real estate conditions, including:

 

•                  the perceptions of prospectivetenants or purchasers of the attractiveness of a particular property;

•                  theinability to collect rent due to bankruptcy or insolvency of tenants orotherwise; and

•                  thelevel of operating costs.

 

Other factors, including changes in tax laws,interest rates and the availability of financing, may also negatively affectrevenues, cash flows and values.

 

Decreases in consumer spending because ofrecessionary economic conditions, tight consumer credit policies or otherfactors could adversely affect our results of operations and cash flows. Inaddition, a portion of our rental revenue is derived from our tenant leases inretail centers which provide for rental payments based upon tenant sales inexcess of specified levels. Decreases in consumer spending could reduce thisrental revenue.

 

Our business and operating results may beaffected by a change in general economic conditions. For example, an increasein interest rates will affect the interest payable on our outstanding floatingrate debt and may also result in increased interest expense if fixed rate debtis refinanced at higher interest rates. In addition, increases in mortgageinterest rates could reduce land sales and adversely affect operating resultsfrom our community development activities. Further, domestic or internationalincidents, such as terrorist attacks, could affect general economic conditionsand our business.

 

**We are dependent upon rental income from ourretail centers and office and industrial buildings**

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Our results of operations and cash flows aresubstantially dependent upon rental income from tenants in our retail centersand office and industrial buildings. We would be adversely affected if asignificant number of our tenants were unable to meet their obligations or if wewere unable to lease a significant amount of space in our properties oneconomically favorable terms. When a tenant defaults, we may experience delaysin enforcing our rights as a landlord and may incur substantial costs inprotecting our investment. In addition, the bankruptcy or insolvency ordeparture of a major tenant at one or more of our properties may have anadverse effect on those properties and could, among other things, make thoseproperties less attractive to consumers or prospective tenants.

 

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**Our properties, some of which aregeographically concentrated, are sensitive to local economic and real estateconditions**

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Some of our properties are geographicallyconcentrated. As a result, our results of operations from our office andindustrial buildings and land sales depend on local economic and real estateconditions, including the availability of comparable, competing buildings andland. Most of our office and industrial buildings are located in theBaltimore-Washington region, including Columbia, Maryland, and in the LasVegas, Nevada metropolitan area. Currently, our land sales also relateprimarily to land in and around Columbia, Maryland, and Las Vegas, Nevada. Inthe future, we also expect to sell land recently acquired in the Houston, Texasmetropolitan area. These office and industrial buildings and land sales areaffected by economic developments in the Baltimore-Washington region and thegreater Las Vegas, Nevada metropolitan area, and will be affected by economicdevelopments in the Houston, Texas metropolitan area. They also are and will beaffected by local real estate conditions and factors such as applicable zoninglaws and the availability of financing for residential and commercialdevelopment.

 

Customer traffic, tenant sales and rents atSouth Street Seaport, a retail center in lower Manhattan that we own andoperate, are generally affected by the level of pedestrian and other trafficand other commercial activity in the area which has been lighter thanhistorical levels following the terrorist attacks of September 11, 2001. It isdifficult to predict with certainty when, if ever, customer traffic, tenantsales and rents at South Street Seaport will return to historical levels.

 

**We are subject to extensive environmentalregulation, which could impose higher costs or liabilities on us**

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We, as an owner, operator and manager of realproperty, are subject to extensive regulation under federal, state and localenvironmental laws. These laws are subject to change from time to time and couldimpose higher costs or liabilities on us.

 

Under various environmental laws, a currentor previous owner or operator of real property may become liable for the costsof the investigation, removal and remediation of hazardous or toxic substanceson, under, in or migrating from that property. These laws often imposeliability without regard to whether the owner or operator knew of, or wasresponsible for, the presence of the hazardous or toxic substances. Thepresence of hazardous or toxic substances, or the failure to remediatehazardous or toxic substances when present, may impair our ability to sell orrent the real property or to borrow money using that property as collateral onterms acceptable to us or at all.

 

Persons who arrange for the disposal ortreatment of hazardous or toxic wastes may also be liable for the costs of theinvestigation, removal and remediation of such wastes at the disposal ortreatment facility, regardless of whether the facility is owned or operated bythat person. Other environmental laws require abatement or removal ofasbestos-containing materials when demolishing, renovating or remodeling,impose worker protection and notification requirements and govern emissions ofand exposure to asbestos fibers in the air.

 

Environmental laws also strictly regulateunderground storage tanks to prevent leakage or other releases of hazardoussubstances into the environment. We could be held liable for costs associatedwith the release of regulated substances or related claims because of ourownership, operation and/or management of properties containing undergroundstorage tanks. In addition to remediation actions brought by governmentalagencies, the presence of hazardous substances on a property could result inpersonal injury or similar claims by private plaintiffs. These claims couldresult in costs or liabilities that could exceed the value of that property.

 

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We generally conduct environmental reviews ofproperties that we acquire and develop. However, these reviews may fail toidentify all environmental or similar problems prior to acquisition. We are notaware of any environmental condition, or notification by any private party orgovernmental authority of any non-compliance, liability or other claim relatedto any environmental condition at any of our properties that would requirematerial expenditures by us. However, we could become subject to such claims orliabilities in the future.

 

**Our Nevada properties are vulnerable to speciallocal economic and environmental conditions**

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We own significant properties in Nevada,including the following: approximately 1.0 million rentable square feet ofoffice and industrial space around Las Vegas; Fashion Show, an approximately1.9 million square foot regional shopping center located on “the Strip” inLas Vegas, which was recently redeveloped; and approximately 6,500 saleableacres of development and investment land located primarily in Summerlin.

 

The Las Vegas metropolitan area is a desert environmentwhere the ability to develop real estate is largely dependent on the continuedavailability of water. The Las Vegas metropolitan area has a limited supply ofwater to service future development, and it may not be successful in obtainingnew sources of water. If new sources of water prove to be inadequate, ourdevelopment activities could be adversely affected.

 

The Las Vegas Valley is classified as aserious PM-10 and serious carbon monoxide nonattainment area by the U.S.Environmental Protection Agency, or EPA. Both PM-10 and carbon monoxide arepollutants for which the EPA has established National Ambient Air QualityStandards. The Clark County Air Quality Management Board has submitted to theEPA for approval State Implementation Plans (“SIPS”) for each pollutant,describing measures to be required to bring the region’s air into attainmentfor these pollutants. The SIPs will affect the cost of development, but are notexpected to have a material impact on us. The EPA has published a proposal toapprove these SIPS but has not yet published a final approval.

 

The rate of growth in the Las Vegasmetropolitan area has been straining the capacity of the existinginfrastructure, particularly schools, water delivery systems, transportationsystems, flood control programs and sewage treatment facilities. Federal, stateand local government agencies finance the construction of infrastructureimprovements through various means, including general obligation bond issues,some of which require voter approval. The failure of these agencies to obtainfinancing for, or to complete, infrastructure improvements could materiallydelay our development efforts in the area or materially increase ourdevelopment costs through the imposition of impact fees and other fees andtaxes, or by requiring us to construct or fund portions of the infrastructure.

 

On February 15, 2002, President GeorgeW. Bush notified Congress that, based upon the recommendation of the Secretaryof Energy, he recommended the Yucca Mountain site in Nevada to be a suitablelocation for a repository site for highly radioactive materials. Yucca Mountainis located approximately 100 miles from Las Vegas. In April 2002, theState of Nevada disapproved the site; however, under the applicable legislation,that disapproval was overridden when the site was approved by the U.S. House ofRepresentatives on May 8, 2002 and by the U.S. Senate on July 9,2002. For the project to proceed, other approvals are necessary, including alicense from the U.S. Nuclear Regulatory Commission. The Department of Energy’s2003 Strategic Plan, dated September 30, 2003, listed the licensing,construction and operation of the repository site at Yucca Mountain by 2010 asa major goal. The location of a repository site at Yucca Mountain could have anadverse effect on the Las Vegas economy and on our properties in the Las Vegasarea.

 

A number of other states have legalizedcasino gaming and other forms of gambling. A number of states have alsonegotiated compacts with Indian tribes under the U.S. Indian Gaming RegulatoryAct of 1988 that permit gaming on Indian lands. These additional gaming venuescreate alternative destinations for gamblers and tourists who might otherwisevisit Las Vegas. These gaming venues could have an adverse effect on the LasVegas economy and on our properties in the Las Vegas area.

 

Nevada Power Company is the electric utilityprovider in Southern Nevada. On September 26, 2003, the court withjurisdiction over Enron Corp.’s Chapter 11 proceedings entered a judgment infavor of Enron against the parent of Nevada Power for damages in an amount of$336 million in a dispute involving early termination of electricity supplycontracts. On November 6, 2003, the court stayed execution of thisjudgment pending appeal by Nevada Power’s parent. The court required NevadaPower’s parent to deposit in escrow during the stay $338 million of bondssecured by its assets plus cash to secure payment of the judgment.

 

In March 2002, the Public UtilitiesCommission of Nevada (“PUCN”) disallowed the recovery by Nevada Power of $434million of deferred purchased fuel and power costs. Nevada Power’s appeal ofthis decision is pending before the Nevada Supreme Court. Following thisdisallowance, each of Standard & Poor’s Rating Services and Moody’sInvestors Service, Inc. lowered Nevada Power’s unsecured debt ratings to belowinvestment grade.

 

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Nevada Power’s parent has stated that anadverse decision in the pending complaint to set aside the $336 millionjudgment for early termination of power contracts, unfavorable rulings by thePUCN in pending and future rate cases, further downgrades in credit ratings anddifficulties in entering new power supply contracts could adversely affect NevadaPower’s financial position and could make it difficult for Nevada Power tocontinue to operate outside of bankruptcy. In addition to providingelectricity, Nevada Power constructs infrastructure, such as transformersubstations and distribution lines that serve development and investment landlocated in Summerlin. Any delay or failure of Nevada Power to constructinfrastructure improvements or provide other utility services could materiallydelay our development efforts in the area and materially increase ourdevelopment costs.

 

**Our development projects are dependent onfinancing and governmental approvals and are vulnerable to unforeseen costs,delays and uncertain revenue streams**

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Our development projects are dependent on:

 

•                  theavailability of financing; and

•                  thereceipt of zoning, occupancy and other required governmental permits andauthorizations.

 

These projects may be vulnerable to:

 

•                  constructiondelays or cost overruns that may increase project costs;

•                  thefailure to achieve anticipated occupancy or sales levels or to sustainanticipated occupancy or sales levels; and

•                  decisionsnot to proceed with projects, which will result in the write-off of costs.

 

**We may acquire or develop new properties, andthis activity is subject to various risks**

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We intend to continue to pursue developmentand expansion activities as opportunities arise. In connection with anydevelopment or expansion, we will be subject to various risks, including thefollowing:

 

•                  wemay abandon development or expansion opportunities that we explore;

•                  constructioncosts of a project may exceed original estimates or available financing,possibly making the project unprofitable;

•                  wemay not be able to obtain financing or to refinance construction loans, whichgenerally have full recourse against us;

•                  wemay not be able to obtain zoning, occupancy and other required governmentalpermits and authorizations;

•                  rentsand operating costs at a completed project may not meet projections and,therefore, the project may not be profitable; and

•                  wemay not be able to obtain anchor, mortgage lender and property partnerapprovals, if applicable, for expansion activities.

 

If a development project is unsuccessful, ourloss could exceed our investment in the project.

 

**Our properties are uninsured against variouscatastrophic losses**

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We carry liability, fire, flood, extendedcoverage and rental loss insurance on our properties with insurance limits andpolicy specifications that we believe are customary for similar properties.However, various losses of a catastrophic nature, such as wars, earthquakes orother similar catastrophic events, may be either uninsurable or, in ourjudgment, not insurable on a financially reasonable basis. SinceSeptember 11, 2001, losses related to terrorism have become harder andmore expensive to insure against. Effective February 1, 2004, we obtainedall risk insurance policies covering our real estate that include generalcoverage for terrorist acts up to $500 million per occurrence and up to $150million for non-certified terrorism events. In addition, Congress passed theTerrorism Risk Insurance Act (“TRIA”) of 2002, which reinsures insurancecarriers for their losses under a formula established by TRIA. Should anuninsured loss occur, we could lose both our invested capital in andanticipated profits from the affected property.

 

Many of our debt instruments, including ourmortgage loans secured by our properties and our revolving credit agreementcontain customary covenants requiring us to maintain insurance. The lendersunder these instruments may take the position that our coverage for losses dueto terrorist acts fails to meet covenant requirements and, therefore, a breachof these debt instruments exists that would allow the lenders to declare anevent of default and accelerate repayment of the debt. In addition, lenders’requirements regarding coverage for these risks could adversely affect ourability to finance or refinance our properties and to expand our portfolio.

 

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**We invest in real estate investments whichmay be illiquid**

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Real estate investments are relativelyilliquid, and some of our properties are subject to restrictions on transfer.This illiquidity tends to limit our ability to vary our portfolio promptly inresponse to changes in economic or other conditions. In addition, significantexpenditures associated with each real estate investment, such as mortgagepayments, real estate taxes and maintenance costs, are generally not reducedwhen circumstances cause a reduction in revenue from the investment. If revenuefrom a property declines while the related expenses do not decline, ourearnings, cash flow from operations and cash flow available for distribution toour stockholders would be adversely affected. A significant portion of ourproperties is mortgaged to secure payment of indebtedness, and if we wereunable to meet our mortgage payments, we could lose money as a result offoreclosure on the properties by the various mortgagees. In addition, if itbecomes necessary or desirable for us to dispose of one or more of themortgaged properties, we might not be able to obtain the necessary lenderconsent or a release of the lien on the mortgaged property, or we may berequired to make substantial payments to the lender(s) to obtain such releaseor consent. We own several of our properties jointly with other partners.Contractual arrangements with joint owners may also limit our ability totransfer, sell or refinance these properties without the consent of thirdparties.

 

**We are subject to competition from otherparticipants in the real estate industry**

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We face considerable competition from otherdevelopers, managers and owners of real estate in pursuing leasing andmanagement revenues, land for development, property acquisitions and tenantsfor properties. We may not be successful in responding to or addressingcompetitive conditions. If we fail to compete successfully, our financialcondition and results of operations could be materially adversely affected.

 

**We are a real estate investment trust andwill continue to be subject to complex current and future tax requirements**

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On January 1, 1998, we began operatingas a real estate investment trust, or REIT, under the Internal Revenue Code of1986, as amended. We may in the future become owned and organized, or operate,in a manner so as to disqualify us as a REIT. In order to qualify for andmaintain our REIT status, we must meet organizational and operationalrequirements. We believe that our organization and method of operation enableus to meet the current tax law requirements for qualification as a REIT.However, qualification for REIT status requires compliance with complexlimitations on the type and amount of income and assets that a REIT may receiveor hold.

 

In order to maintain our REIT qualification,we must make distributions to our stockholders, aggregating annually at least90% of our REIT taxable income (which does not include net capital gains). Theactual amount of our future distributions to our stockholders will be based onthe cash flows from operations, from properties and from any future investmentsand on our net taxable income. We could have taxable income without sufficientfunds to enable us to meet the distribution requirements applicable to a REIT.As a result, we may have to borrow funds or sell investments on less thanfavorable terms or pay taxable stock dividends to meet distributionrequirements.

 

Also, to maintain our REIT qualification, notmore than 50% in value of our outstanding stock may be owned, directly orindirectly, by five or fewer individuals (as defined in the Internal RevenueCode to include certain entities). We believe, based upon publicly availableinformation, that we continue to satisfy this share ownership requirement, aswell as another Internal Revenue Code provision that, in effect, requires thatwe have at least 100 beneficial owners of our stock. If we fail, for anyreason, to satisfy these share ownership requirements, we would cease toqualify as a REIT and could also become subject to monetary damages.

 

If we fail to maintain our qualification as aREIT, we would have to pay federal income tax, including any applicablealternative minimum tax, on our taxable income at corporate rates. In addition,under current law, distributions to our stockholders would no longer bedeductible. Unless entitled to relief under statutory provisions, we would alsobe disqualified from treatment as a REIT for the four taxable years followingthe year in which qualification was lost. This treatment would reduce our cashflow, as well as net earnings available for investment or distribution tostockholders, because of the additional tax liabilities for the year or yearsinvolved. Moreover, during any period of disqualification, we would no longerbe required by the Internal Revenue Code to make any distributions as acondition to REIT qualification. To the extent that distributions tostockholders would have been made in anticipation of our continuing to qualifyas a REIT, we might be required to borrow funds or liquidate investments onadverse terms to pay the applicable tax.

 

Future economic, market, legal, tax or otherconsiderations may cause us to determine that it is in our best interest andthe best interest of our stockholders to revoke our REIT election. We wouldthen be disqualified from electing treatment as a REIT for the four taxableyears following the year of the revocation.

 

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**Termination of our defined benefit pensionplans may require us to record a loss, and we may be required to makeadditional contributions to the plans**

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We have a funded defined benefit pension plan("funded plan") covering substantially all of our employees andseparate, nonqualified unfunded defined benefit pension plans primarilycovering participants in the funded plan whose defined benefits exceed theplan’s limits ("supplemental plan"). In April 2003, we modifiedour funded plan and supplemental plan so that covered employees would not earnadditional benefits for future services. In February 2004, we adopted aplan to terminate our funded and supplemental plans effective May 1, 2004.  When we terminate the plans, we will berequired to settle the obligations under the funded defined benefit pensionplan by paying accumulated benefits to eligible participants.  This settlement could, depending on themarket value of the assets of the funded plan and the relevant interest ratesat the time of settlement, require us to make additional contributions to thatplan, which could be significant.  AtDecember 31, 2003, the funded plan had sufficient assets to settle itsobligations without additional contributions by us.  At the time of the settlement of the obligations of the fundedplan, we will recognize any unrecognized losses associated with that plan.  At December 31, 2003, these unrecognizedlosses were approximately $19.8 million. However, we expect the unrecognizedlosses will increase due to the acceleration of payments as a result of terminationof the plan and may also change depending on the market value of plan assets,interest rates, and other factors.  Weexpect that a portion of these losses will be recognized prior to the finaldistribution of plan assets as plan participants retire or otherwise terminateemployment in the normal course of business. The termination of the funded plan is subject to approvals by thePension Benefit Guaranty Corporation and the Internal Revenue Service, andwhile the timing is uncertain, we expect to settle all of the plan's remainingobligations in late 2004.  In connectionwith the funded plan termination, we expect to transfer the assets of thefunded plan to highly-liquid, low-risk investments to mitigate risk during theperiod prior to distributions to participants.

 

Concurrent with the distribution of fundedplan assets, we will transfer credits for benefits earned under thesupplemental plan to a deferred compensation plan and recognize settlementlosses equal to any unrecognized loss at the date of transfer.  At December 31, 2003, these unrecognizedlosses were approximately $4 million and may change depending on interest ratesand other factors.  We expect to fundthese benefits as participants retire or terminate.  The supplemental plan obligations were $16.9 million at December31, 2003.

 

In a related action, we instituted a newdefined contribution plan under which we may make discretionary contributionsto 401(k) retirement accounts of participating employees. We expect torecognize significantly lower expenses related to the new defined contributionplan as compared to those we would have recorded (excluding settlement charges)had we not curtailed our defined benefit pension plans.

 

**Risks Related to the Acquisition of Assets fromRodamco**

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**Properties designated for sale which wereacquired jointly may not be sold on the anticipated time schedule or atthe prices expected**

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We, Simon and Westfield have agreed to ownjointly some of the properties acquired in the acquisition of assets fromRodamco. We and the other two purchasers have sold or otherwise disposed ofsome of these jointly-owned properties and may, in the future, designate othersfor sale or other disposition. We will not have independent control over thetiming and manner of the sales of the remaining properties, but rather willhave to make decisions jointly with the other two purchasers. Thesedispositions will be, in some cases, subject to consent or first refusal rightsthat may delay the sale or reduce the expected price. As a result, we cannot becertain as to the timing or terms of any potential disposition of these assets.

 

**We share control of some of the acquiredproperties with the other two purchasers and may have conflicts of interestwith those purchasers**

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We own some of the acquired propertiesjointly with Simon and Westfield. The consent of each of the other purchaserscould be required with respect to managing, financing, encumbering, expandingor selling these properties. We might not have the same interests as the other purchasersin relation to these properties. Accordingly, we might not be able to favorablyresolve any of these issues, or we might have to provide financial or otherinducement to the other purchasers to obtain a favorable resolution.

 

In addition, various restrictive provisionsand approval rights apply to sales or transfers of interests in thejointly-owned properties. Among other things, we might be required to makedecisions about buying or selling interests in a property or properties at atime that is disadvantageous to us.

 

**We may be responsible for unknown materialliabilities**

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We may be exposed to liabilities relating toRodamco that we may have failed to discover prior to completion of theacquisition of assets from Rodamco. These liabilities may include liabilitiesthat arise from noncompliance with environmental laws by prior owners for whichwe, as a successor owner, will be responsible. Our purchase agreement withRodamco does not provide for indemnification of us by Rodamco. Rodamco hasalready distributed to its shareholders substantially all of the proceeds paidtoRodamco for the assetsand is currently winding up operations in connection with its dissolution.

 

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**We acquired partnership interests withexisting partners who have tax protection arrangements in place**

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We acquired our interests in some formerRodamco properties by acquiring interests in existing partnerships. Theseexisting partnerships have arrangements in place that protect the deferred taxsituation of existing third party limited partners. Violation of thesearrangements could impose costs on us. As a result, we may be restricted withrespect to decisions such as financing, encumbering, expanding or selling theseproperties.

 

**Risks Related to Our Common Stock**

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**The price of our common stock may fluctuatesignificantly**

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The market price of our common stock couldfluctuate significantly, because of, among others, the following factors:

 

•                  ourquarterly results of operations and Funds From Operations or those of othercompanies in our industry;

•                  thepublic’s reaction to our press releases, announcements and filings with theSEC;

•                  changesin estimates of our net earnings or Funds From Operations or in recommendationsby research analysts;

•                  changesin general conditions affecting the U.S. economy or financial markets; and

•                  otherdevelopments affecting us or our competitors.

 

In recent years, securities markets haveexperienced extreme price and volume fluctuations. This volatility has had asignificant effect on the market price of securities issued by many companiesfor reasons unrelated to the financial or operating performance of thesecompanies.

 

**Recently enacted U.S. federal income taxlegislation reduces the maximum tax rates applicable to corporate dividendsfrom 38.6% to 15%, which may make investments in equity securities ofcorporations relatively more attractive than investments in REITs and may havean adverse effect on the market price of our common stock**

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On May 28, 2003, the President signedinto law legislation that, for individual taxpayers, reduces the tax rate oncorporate dividends to a maximum of 15% for tax years from 2003 to 2008. REITdividends generally do not qualify for this reduced tax rate because REIT incomegenerally is not subject to corporate level tax. Due to the activitiesconducted through our taxable REIT subsidiaries, however, it is likely thatcertain amounts of dividends payable by us will qualify for this reduced taxrate because part of the dividends will be attributable to dividends from ourtaxable REIT subsidiaries. This new law could cause stock in non-REITcorporations to be a relatively more attractive investment to individualinvestors than stock in REITs and could have an adverse effect on the marketprice of our common stock.

 

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