WORLD PROPERTY CHANNEL ®

William Ackman

(CHICAGO, IL) -- The sky is looking clearer today for General Growth Properties (NYSE: GGP) as its two largest creditors agree to pump a total $3.925 billion into the bankrupt mall owner's cash pipeline.

Miami-based Fairholme Capital Management, LLC, one of GGP's largest unsecured creditors, and New York City-based Pershing Square Capital Management, one of GGP's largest equity holders and a major unsecured creditor, propose to commit the new equity capital at a value of $15 per share.

Together with the previously announced $2.625 billion proposal from Brookfield Asset Management, Inc., the $3.9 billion offer, if accepted, would provide GGP with more than $6.5 billion of committed equity capital, the company says in a prepared statement today.

To help Pershing Square's participation in the deal, Pershing CEO William Ackman has resigned from GGP's board of directors.

Please see related Real Estate Channel postings:

• General Growth Properties Plans to Exit Bankruptcy by Splitting Company in Half, 2-24-10
• General Growth Not Biting at Simon's $10 Billion Apple, Feb. 17, 2010
• General Growth's Fresh Funding Lifts 96 Properties Out of Bankruptcy Protection With 16 Left to Save, Jan. 25, 2010
• General Growth's Chapter 11 Filing Called Largest in U.S. Retail Bankruptcy History, April 17, 2009
• General Growth Properties Stock Price Rise Puzzles Wall Street, April 7, 2009
• Fourth General Growth Properties Mall Seized, March 23, 2009
• General Growth Wins Breather but Hedge Fund Manager Predicts Bankruptcy Filing Coming, March 17, 2009
• Clock Ticking on Bankruptcy-Saving Deal for General Growth Properties and Subsidiary, March 12, 2009
• General Growth Properties' Piggy Bank is Low as Debt Piles Up, Feb. 24, 2009
• General Growth Properties Dumps 3 Trophy Retail Centers in Public Marketplace, Dec. 22, 2008

"The Company believes that this combined equity capital along with its anticipated new $1.5 billion debt issuance - or the reinstatement of a comparable amount of existing debt - would, if accepted, deliver substantially all of the cash required to fulfill the Company's capital needs in connection with its emergence from bankruptcy and provide unsecured creditors with par plus accrued interest in cash," according to the GGP statement.

"The GGP board of directors will study the proposal consistent with its fiduciary duties," the company says. "The proposal remains subject to approval by the Board of Directors, approval by the Bankruptcy Court of proposed fees in the form of warrants and higher and better offers."

GGP CEO Adam Metz says, "The proposal from Fairholme and Pershing Square builds on the significant momentum we have created to return GGP to a strong financial foundation for the future."

"Our goal is to raise capital in the most cost-efficient way to maximize value for all of our stakeholders. We are pleased with the support shown by one of our largest unsecured debt holders and one of our largest equity holders."

On Ackman's leaving as a GGP director, Metz adds, "Bill Ackman has made significant contributions to GGP during his time on the Board. We understand his decision to resign to facilitate Pershing Square's participation in this proposal."

Under the terms of the proposal, $3.8 billion would be used to purchase shares of GGP stock at $10 per share, and $125 million will be used to backstop the remaining portion of a $250 million rights offering by General Growth Opportunities, a new company that will own certain non-core assets, at a price of $5 per share.

Additionally, the company would have the right to reduce the $3.8 billion by $1.9 billion to the extent it is able to raise equity capital on more attractive terms. The proposal from Fairholme and Pershing Square is not subject to due diligence.

As previously announced, GGP reached an agreement in principle with Toronto-based Brookfield Asset Management Inc., to invest $2.625 billion in a proposed recapitalization of GGP at a plan value of $15 per share and provide par plus accrued interest to unsecured creditors.

The proposed equity commitment from Brookfield doesn't require due diligence from GGP and is subject to definitive documentation, approval by the Bankruptcy Court of proposed fees in the form of warrants and higher and better offers, according to the GGP statement.

"The proposal is designed to maximize value for all GGP stakeholders and enable a restructured GGP to emerge from bankruptcy on a standalone basis with a diverse portfolio of high-quality income-producing assets, strong cash flow and a solid balance sheet capitalized principally with long-term non-recourse debt," says the GGP statement.

General Growth Properties currently has ownership interest in, or management responsibility for, over 200 regional shopping malls in 43 states, as well as ownership in planned community developments and commercial office buildings.

The company's portfolio totals approximately 200 million square feet of retail space and includes over 24,000 retail stores nationwide.

---