General Growth Properties' CEO Hosts Institutional Investor and Analyst Conference - Presentation Transcript

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General Growth Properties, Inc. (NYSE:GGP) Institutional Investor and Analyst Conference Call December 8, 2011 9:45 AM ET


Kevin Berry - Vice President of Investor Relations

Sandeep Mathrani - Chief Executive Officer

Shobi Khan - Chief Operating Officer

Alan Barocas - Senior Executive Vice President of Mall Leasing

Richard Pesin - Executive Vice President, Anchors, Development and Construction

Chuck Lhotka - Executive Vice President of Asset Management

Hugh Zwieg- Executive Vice President, Capital Markets

Steve Douglas - Chief Financial Officer


Good morning, everyone. Welcome to GGP 2011 Investor and Analyst Conference. My name is Kevin Berry, the company’s Investor Relations Officer. This conference will contain forward-looking statements by General Growth Properties. Such forward-looking statements including expectations with respect to results, are based upon the current belief and expectations of GGPs management and are subject to risks and uncertainties and which results could differ from the forward-looking statements. Such risks are more fully disclosed in GGPs filings with the Securities and Exchange Commission and the information discussed during this conference should be considered in light of such risks.

This conference may include time sensitive information that may be accurate only as of today's date, December 8, 2011. During this conference we will discuss certain non-GAAP financial measures, reconciliations to these measures to the most directly comparable GAAP measures are included in appendix A. GGP does not assume any obligation to update the information contained in this conference. I would now like to turn and introduce Sandeep Mathrani, General Growth’s Chief Executive Officer.

Sandeep Mathrani

Good morning. Thanks, Kevin. It’s critical for the success of General Growth Properties for us to build new relationship and foster our old relationships. Thank you all for taking the time out of your schedule. I know most of you came in last night, so I do appreciate you staying away from your family for an evening. One year ago, I actually got this job and we went on a road show. At the time I didn’t know what I was getting myself into. And so I got a quick education on GGP.

On our road show we need a couple of ground rules. First, we would have an NOI of about $2.2 billion in 2011, we have achieved that. Second, we would have occupancy of about 93.5%, I think we have surpassed that. Third, our occupancy cost would be higher than the 13.5%, it’s peaked at 13.6%. However, if you base this upon 2010 sales, it’s closer to 14.5%. So I think we are doing well. It is just the beginning.

Unfortunately, there has been a lot of volatility in the stock market. Our stock, as all of you know, has not been immune to that. More so, the reason is not only the volatility in the market, but I think we should take some blame ourselves. It has been because of our lack of proper communication with you, the investors. We plan to do a better job through the weekend, go out and tell you our amazing story.

Our story is compelling. My first order of business in January was to establish a management team. A management team that’s experienced and credible. In January, we came up with that management team, and all the many years of experience are now contributing to the success of GGP. Before we go on, I would like to first acknowledge, Steve Douglas. Steve, thank you for an outstanding year for putting us on the right platform, giving us proper direction. Steve will be going back home to Toronto to be with his family and to Brookfield. I actually debate, I am not sure which one is family. Children and wife or Brookfield. Steve will give us highlights of 2011 and provide guidance for 2012, and I am sure most of you would sneak through that book or gone through the website, but let us play our slides.

We’re extremely pleased to have Michael Berman, join us as our new Chief Financial Officer. He will take his role on December 15. Mike’s real estate career spans 25 years. He is no stranger to most of you in this room. He has been CFO of a publicly traded REIT, Equity LifeStyle, for the last eight years. Welcome, Michael. Once again, each of the people that you would hear from today, are very talented. They’re experienced in the real estate field. I will briefly introduce each one of them and give you their key responsibility.

Shobi Khan. Shobi is Chief Operating Officer of General Growth Properties. Shobi’s key areas of responsibilities are; acquisitions, really more dispositions, our joint venture relationship, our Brazilian platform, human resources and information technology. I have known Shobi since 2006. When I was at Vornado, we had an attempt to buy equity offers. Alan Barocas, our Senior Executive Vice President of Mall Leasing. Alan is responsible for tenant relationships, leasing, strategy and research, business development and marketing. Alan and his team -- and by the way many members of his team and our senior executive team are in the audience today, most of whom are here his senior team have done an outstanding job. Outstanding job leasing 9 million square feet in 2011.

I have known Alan since 1993, when he was real estate rep at The Gap. So when he talks about The Gap later, he knows. Richard Pesin, is our Executive Vice President of Development. He is also the man in-charge of Anchor and big box leasing. Richard has been very focused, identifying compelling growth opportunities within the portfolio. He has identified over $1.6 billion of redevelopment/development opportunities within our portfolio as double-digit, first stabilized deal cash on cost, old fashioned, no fancy IRRs return. Rich and I have worked together from 1989 to 2002, at which point he took my role at Forest City.

I am pleased to introduce Chuck Lhotka, our new Executive Vice President of Asset Management. Chuck will talk about operations, expenses, and of course our venture into sustainability. Chuck has been with GGP for 40 years. He keeps reminding me it’s 39.6 years, as if that will make him a year younger. Hugh Zwieg, Hugh is our Executive Vice President of Finance. He is our capitals markets man. He has financed, refinanced over $4 billion this year. He has been fixated on laddering our maturities, but more importantly than that, he has spent his year rebuilding and strengthening the company's relationship with the lending community. Thank you, Hugh.

And finally, last but not least, is Marvin Levine. Marvin is our Chief Legal Officer. Marvin has a team of legal professionals who ensure that GGP conducts its business to the highest standards, mitigates risk and implements mitigating strategies. Being a lawyer he outmaneuvered me from a talking role, but he is here, a member of our senior management team. Our team is in place. We have a real company. They are focused, energized and committed. We are here to optimize shareholder value.

To diligently pursue our path, we needed to go see each and every one of our assets. The first day, Jan 17, I spent here in Chicago at GGP headquarters. The next day we started our tour to go see each and every asset, including all the non-core assets as I like to say, even the Baskin-Robbins in Utah, which was a JP priced, JP Realty acquisition. What resulted was a property level business plan for each asset. It focused where we should spend most of our time. Each one of the members who will speak today will go into more details into our plan. But for me, the most important part was to meet the people on the ground. To meet the mall manager, the meet the leasing agent. People who are responsible for the success of GGP, I thank them all.

Our strategic business plan focuses on four key areas. I’m glad someone else is clicking the slides, I forgot about them by the way. First, high quality malls. GGP has an extraordinary collection of real estate. We own malls, such as Ala Moana in Hawaii; Fashion Show in Vegas; Stonebriar in Texas; my favorite, Park Meadows in Colorado; Water Tower, which you're going to go visit in Chicago. I can keep going across the country as you can see, Bridgewater in New Jersey, Natick in Massachusetts.

We own 25 of the top 100 malls in the country. We also own 125 of the top 600 malls in the country. Our goal is to own the best malls in the United States. To accomplish that goal, Shobi and team has been able to sell over 12 million square feet of non-core GLA, non-core real estate this year. We are also seeking extraordinary acquisition. In September, we announced the acquisition of Plaza Frontenac with an institutional partner, Canada Pension Plan. For the deal to be cash neutral, we sold in minority interest in St. Louis Galleria. We now control the best two malls in the St. Louis market, both with sales of over $500 per square foot.

Leasing. I love to say, all we should be doing is lease, lease, lease. We have an unwavering focus on increasing occupancy, increasing occupancy cost, our spreads are getting stronger. You can see in 2007 and 2008 we were a leader, absolute leader. Our spreads were $9, $6. Unfortunately, in 2009, 2010 and deals done in 2011 in 2010 had negative spreads. As the new management team has come in 2011, the deals that commence in 2011, and those in 2012, have a positive spread of $4 or so, about 7%. 2013 and 2014, the rent expirations are on low to mid-50s. So we have substantial room to grow for years to come.

Our next focus. In 2011, we have been very focused on de-risking our balance sheet. As I said before, we have selectively and proactively refinanced $4 billion of our debt. Lowered interest expense, lengthened maturity. You will hear me say it at the end, but I will say it again because I can't say it often enough, 2012 will be focused on deleveraging our balance sheet. We are disciplined in our capital allocation. Until now we couldn’t allocate capital to minor portfolio. Of the $1.6 billion, we intend to spend $408 million or $285 million at share over the next three four months.

Rich will go into detail on that. Asset management, very important to us. People need an environment to shop in that’s pleasurable. We need to service two clients, our customers and our tenants. We do have real estate that separates us from our competition, separates us from our peer. However, that doesn’t mean we just sit on our lounge and not provide them an environment that they can enjoy shopping in. I would like now to introduce, Shobi, our Chief Operating Officer.

Shobi Khan

Good morning, everyone. It’s a pleasure begin here and I can definitely say it’s been an eventful and exciting year for general growth. As Sandeep mentioned, we have accomplished a lot this year and you are going to hear about all these accomplishments this morning. 2011 has been a year of transition for General Growth. We launched the IPO last November, and in just over 12 months have significantly repositioned this portfolio.

We have now changed the portfolio, both from a profit level and a human capital perspective. We have an extraordinary portfolio and a flatter, more nimble organization. Let me begin my presentation with an overview of the direct reports and team that I get to work with. On the left side of the screen, the acquisitions and dispositions team. Andrew Galvin and Steve Janowiak head this group up. This group has accomplished almost $1 billion worth of activity this year. Primarily dispositions with a few select acquisitions.

Next, Meredith O’Sullivan. Meredith is with General Growth for 14 years and heads our joint venture relationships. Sandeep mentioned we have added CPP Investment Board to this impressive roster, and I will talk more about these important relationships and our joint venture portfolio a bit later. Luc Picotte, head up the asset management of our strips and office portfolios. Under his leadership, we have been successful in monetizing several of these non-core assets this year.

Matt Beverly, has been with General Growth for seven years and has been involved since inception of all our investments in Brazil. General growth initial $125 million investment has grown to approximately $500 million, generating an internal rate of return just under 30%. Cathie Hollowell has been with General Growth for 14 years and overseas our human resources department. Under Cathie’s leadership, she spearheaded the transformation of the organization overseeing the headcount reduction from approximately 3100 employees to 2000 employees.

Finally, Scott Morey, heads our information technologies group. Scott and I work at equity office and we both realize the importance of harnessing technology to increase productivity of our people. Scott is trying to integrate our IT platform now to increase our operation efficiencies. Some of the near term projects are, energy procurement as well as G&A procurement. Now let’s talk about the real estate.

The next slide shows how we had this year of transition. We have shed over 30 malls and approximately 10 million square feet of mall and freestanding GLA. Some of our top markets include Las Vegas, Honolulu and Texas. At our Las Vegas portfolio, same store sales have increased over 13% with our portfolio now averaging $815 per square foot. Honolulu, for GGP, that means Ala Moana. And Ala Moana for those that haven’t seen it, is truly a world calls property. The property has shown tremendous -- significant growth in NOI, and we feel it’s got significant near term opportunities to increase NOI.

Finally, our three properties in Texas, or three markets in Texas, excuse me. Dallas, Houston and San Antonio. Combined, those three markets represent approximately 10% of our regional mall core NOI, and those markets are the leaders in terms of U.S. job growth. Now, I mentioned this year of transition in the investment activity. This chart summarizes -- let everyone flip to that page -- this chart summarizes our investment activity. As you’ll notice we’ve generated over $530 million of net proceeds of sales. The significant transactions in the mall category include, Faneuil Hall in Boston and our interest in Arrowhead and Superstition Springs in Arizona.

In the office category, there were two significant transactions. Our sale of Arizona Center and Westlake office in Seattle. And as for acquisitions, we mentioned the acquisition of St. Louis Galleria. In the box category our significant acquisition there was the purchase of the Neiman Marcus box at Fashion Show. As you can see we have done almost 30 transactions this year, so we have got a team that has not only been very productive but is generating good returns.

Now, I mentioned this is a year of transition. This slide kind of summarizes, from an core NOI point of view, what we have accomplished. As you can see we have got a significant exposure to the regional mall category, while we have made significant progress in our office and strip portfolio. We have decreased our office exposure by approximately 50%, and the strips by approximately 25%. You will notice contribution of Aliansce has grown and we anticipate to continue to grow and Aliansce’s portfolio is showing strong same store sales as well currently it’s four developments underway which we anticipate will be delivered in 2012 and 2013. We mentioned CPP being added to our investor’s relationships.

The next slide summarizes some but not all of our joint venture relationships. We are fortunate to have such good partners as New York Common, Morgan Stanley, ADIA and CalPERS. We view these relationships as important not only for potential acquisitions, but potentially recapitalizations of some of our existing assets. I can't tell you since joining General Growth, how many calls I get every week asking, can we invest alongside you at some phenomenal asking prices. So we continue to mind this portfolio over the next couple of years. You will note only 19% of our entire portfolio is attributable to joint ventures.

Now for the little gem in our portfolio, Aliansce. GGP invested in Aliansce in 2004. The company went public in January of 2010. GGP is the largest shareholder of Aliansce, owning approximately 31%. Sandeep and I both sit on the board and are actively involved in the company. As many of you know Brazil, is showing solid results. Their economy is growing much faster than the U.S. This middle class that’s emerging there has got a strong demand for retail. As shown in the chart in the lower left, Aliansce’s same store sales have increased over 11% from last year. We anticipate a combination of this same store and as shown on the right, their growth in terms of development to continue the strong EBITDA growth from the company.

Now for an update on the Rouse Properties spinoff, my pet project over the last five months. The map shows the 30 malls comprising the Rouse portfolio, the anticipated portfolio, and it comprises 9 million square feet of G&A, mall G&A. We are currently in a quiet period with the SEC, but we will file both our Form 10 and S-11. The Form-10 is for a stock distribution and the S-11 is for a rights offering. Next slide kind of gives you an update, we have got the new management team in place, and we anticipate completing the company’s capital stack shortly.

We anticipate a record date for the spinoff in late December and the Rouse property spinoff occurring in mid-January. So this slide, to me summarizes this year in transition that we are talking about from our regional mall category. You will note, our average sales now are almost approaching $500 per square foot, and we have shared, in the mall category, over a $1 billion of property level debt. So what are the key takeaways from an investment perspective. You will continue to see us focus on non-core asset sales. We will complete the Rouse spinoff by year-end and we will recycle capital from our non-core malls, strips and office. We will do this prudently as we lease up, stabilize and then monetize these assets.

We will maintain and expand our Brazilian platform and invest alongside Aliansce, and as Rich is going to talk about a little bit later, we are going to really focus near-term on our redevelopment opportunities in our existing portfolio. And as opportunities arise, we will selectively pursue acquisitions, such as we did this year with Plaza Frontenac and the Neiman Marcus box. We will be disciplined in stewardship of capital for our shareholders and try to create long-term value.

So with that let me turn the presentation over to Alan Barocas, our Senior Executive Vice President of Mall Leasing. Alan?

Alan Barocas

Thank you, Shobi. Before I start my presentation I am going to apologize ahead of time. Having spent so much time on the retail side, there are times when I refer to stores as shopping centers, centers as stores, tenant as landlords etcetera, so please bear with me. It has been a transition. On behalf of the entire mall leasing team, I would like to thank you for the opportunity to provide you with some insight into who we are, how we are approaching this very challenging environment, and some of the accomplishments, we have made in the short 10 month period.

Our journey started in January, and we believe we are on the right path to meet our goal, to be the gold standard for mall leasing. To begin with, I would like to introduce our senior team. Primary driver of revenue is our leasing team. In addition to developing the relationship with our retail partners, they are responsible for the development and the execution of a strategic plan that maximizes the potential of our centers. Our approach is to take a laser like focus on improving our merchandize mix, revenue, occupancy level, occupancy cost and productivity.

Leading our outstanding leasing team are three SVPs. Christopher Bruck in the East, Seven Weiss in Central, and Troy Benson in the West. Each of them brings a unique prospective to our business that with the combined total of over 50 years of leasing experience, they are well respected in our industry. As mentioned, leasing is the primary drive of our efforts. However, they are not alone. They are supported and complemented by our research and strategy team, business development and marketing. Research and strategy is headed up by Tom Bernier, a veteran of this sector for over 20 years. Tom and his team are providing our leasing team and our retail partners with the analytics and data they need to identify opportunities within our portfolio.

Business development is headed up by Melinda Holland, a 19 year veteran. Business development is focused on developing alternative rent streams and supplementing permanent leasing income by back-filling vacant space. Last but certainly not least, our marketing department is headed up by Susan Houck, a 20 year veteran. Susan and her team are focusing on improving traffic to our centers by concentrating on local events and use of social media and mobile technology. The senior team is aligned with neutral goals and objectives. Their passion for our business is second to none.

Let's first take a look at the retail landscape. The headline here is that retailers are still very active in executing their respective growth strategies. This was very evident this past week when we were in New York ICSE, and the activity was strong as ever. Our mature are growing to a combination of expansion and new concepts. Forever21, Apple, Victoria's Secret are examples of retailers who are expanding their footprints to match the evolution of their product assortment, growth and consumer demand. Mature retailers have continued to introduce new growth concepts. Victoria's Secret’s Pink, J. Crew's Madewell, Gap's Athleta and Anthropologie's Free People, are examples of this. Fast Fashion, with its emphasis on fashion and value, continue to expand in the marketplace. H&M, Forever21, Love Culture, are leading the pack.

Finally, recognizing the potential of the U.S. market, international retailers have increased their presence in the United States. Sweden’s H&M, Japan's UNIQLO, Canada's Joe Fresh, Finland's LEGO, and the UK's Topshop, who by the way will be opening their first mall store at our Fashion Show Mall in Las Vegas, are examples of this. Given the quality of our portfolio, we believe that we are primed to be the venue of choice for our retailers and shoppers.

No discussion about retail landscape would be complete without mentioning e-commerce. Retailers and landlords are embracing e-commerce, social media and mobile technology, recognizing the positive impact that it has on the customers experience in our centers. While initially used as direct sales channel, retailers are using their websites for many purposes. Gap’s Athleta and American Eagle 77kids are examples of concepts that were incubated online and now have become brick and mortar growth vehicles. Across all segments, whether it be luxury, specialty, or department stores, social media platforms like Facebook, Twitter, YouTube, Foursquare, are enabling retailers to interact with loyalty customers in a way never before seen. .Victoria's Secret, Macy’s and Burberry are examples of some of the leaders in this area.

Retailers such as LensCrafters and Tourneau are using a multichannel approach and the use of their website as a way to drive in store traffic, increase sales conversion and streamline and bring fun back to the shopping experience. Now that we have discussed the retail environment, I would like to transition into GGP landscape. As Shobi indicated, we have been able to increase the productivity of our entire portfolio to approximately $500 per square foot. As you can see from the slides, our top 20 centers average over $800 per square foot. Our top 50 centers generate over $650 per square foot.

Some of our top centers, include Ala Moana, Fashion Show and Shoppes at Palazzo that generate $1239, $1002, and $976 per square foot respectively. While our success in 2011 has reset the productivity bar, we believe we have but touched the tip of the iceberg. And there are many opportunities to reach our potential. The execution of a strategic plan that calls for the introduction of new and unique tenants, the right sizing of our mature tenants, and the replacement of poor performing retailers, are examples of how we plan to achieve our goal of increased productivity.

We expect gradual growth in occupancy over the next two years. We believe that the sustained retail demand as described in the retail landscape will allow for this increase. That being said, I would like you to focus on the area on the graph that’s shaded in purple. As you can see while the overall rate is steady, the percentage growth of our permanent occupancy grows at a much more accelerated pace. This is the result of our focus on replacing rather than renewing, average and underperforming tenants. Taking a creative multi-suite leasing approach and the profitable conversion of temp to perm opportunities in our center. In addition to increasing our permanent occupancy status, it would also drive rental revenue.

The headline for this slide could be seen in the orange section of this bar graph. The stores commencing in 2011 and ’12, since January of this past year, we have increased the percentage of new deals from 34% to 50%. As Sandeep mentioned in his opening remarks, and some of you may or may not know, between March and July of this past year, Sandeep, Rich Pesin and myself and other key executives, visited everyone of our centers. Besides bringing us closer together both personally and professionally, during that time we learned a number of things. We learned that the human body only needs four hours of sleep. We learned that we can subsist on protein bars, beef jerky and trail mix. We also developed a new found respect for Chipotle.

Seriously, what we learned was that whether it was a $400 per square foot center or a $700 per square foot center, there were opportunities to both increase the tenant mix, replace poor performing tenants and improve the shopping experience. We also came away from these trips with what can be called a foundation of a center by center strategic property plan for leasing development and asset management. It is our roadmap to success.

I do want to take a second and just point that out, that in leasing these things don’t happen overnight. As this graph shows, it shows you the lifecycle of a typical deal. A normal deal from deal approval to store opening can take anywhere from 7 to 10 months. There are variables that impact this timeline. It could be the retailers opening schedule. It could be their prioritization of their leases. Many retailers prioritize their lease based on opening, not when the deal was approved. Permit, approvals, so these are some of the variables that are challenges to us. But to mitigate the risk, our leasing team, our business development team and our tenant coordination group, work closely together to ensure that there are temporary tenants in place to ensure a rental stream until the permanent tenant is ready to take their place.

As Sandeep mentioned previously, since January we have made great strides under developing a positive revenue trend. I would like to call your attention to the lines boxed in orange. These details are suite-to-suite spread performance on all deals approved from January this past year to October, that are set to commence in 2012. Comparing prior to post-January ’12 approvals, we have been able to increase our initial spreads from 2% to 8% and our average spreads from 10% to 19%. When you combine the two for all deals approved in 2012, we have been able to achieve a 7% initial and a 17% average spread despite the negative drag on the all deals I just alluded to.

No discussion of the leasing environment would be complete without discussing store closures. Very simply said, we look at store closures as a dynamic that has great opportunity to bring new tenants to our centers and increase the productivity and revenue. We take a very proactive approach to accomplish this. Our leasing, business development team and our strategy and research group, they close to the trends in the business and we develop in our internal watch list, anticipate closures and begin the process of identifying both permanent and temporary tenants for vacancies.

On the screen you can see examples of this. First let’s talk a little bit about borders. When we came on board in January, we had heard a lot about Borders and where they are and where they might be going. But we started to monitor them very specifically. And as a result when the bankruptcy was finally announced, we had already pre-leased and approved 13 of the 20 locations that were closing. We added new tenants to these centers, such as Forever21, Total Wine, Fresh Market, Dave and Buster’s and DSW. And more importantly if you take a look at the revenue that we have generated, we generated more rented out of those 13 stores than we did the 20 stores that were initially identified as closures.

Next is The Gap. A little over a month ago The Gap announced that they were closing 20% of their portfolio in fiscal 2012 and ’13. While the 20% figure was not necessarily predictable, the fact that they were going to close stores was not news to us. We had been anticipating this for a while. In fact, we had already started to identify replacements on an ongoing basis. We took a look at this scenario as a great opportunity since The Gap has traditionally outstanding locations. They also traditionally pay less than market rent. But unfortunately in the last three or four years they were also underperforming to the average of our centers. So once again, we believe we have an opportunity here that to increase both revenue and productivity.

So what we did, we just took a look at our portfolio. We have approximately 100 locations that were expiring within that ‘12 and ’13 period. Based on both market intelligence as well as my past 25 years with them, we have identified potentially 29 stores that might be at risk. So we are actively at this point looking at replacements and have replaced some of them already. But we feel comfortable that based on the quality of the location and the rent that they are paying that once again it’s an opportunity for us on both the sides. Just a closing comment though. We still believe that Gap is an iconic brand, let’s make no mistake about it. And they are, and can continue to be an important member of our retail family. With that being said, we will continue to make the business decisions required to improve the profitability and the productivity of our stores.

You have heard me refer to our business development team during the course of this presentation. They have accomplished amazing things. And they have done this through a maniacal and a passionate focus in two areas. Alternative rental streams, revenue streams, and temporary leasing. In addition to the traditional revenue generation, such as kiosks, sky banners etcetera, they are making great strides in increasing sustainable strategic partnerships with local and national companies. They are bringing not only revenue to our centers, but bringing excitement as well. In 2011, the strategic partnership group generated approximately $43 million in revenue. And there the non-traditional revenue generator is the use of digital technology to support our revenue generation efforts.

We believe that this sector has great potential to bring additional revenue, and I look forward to sharing with you some of these results next year. Last but certainly not least, our BD group has done an outstanding job in backfilling vacant space to generate revenue, provide tenants to address store closures and incubate new business. We are dedicated to establishing our malls as the social focal point of our shoppers. We want to create a shopping experience that offers great retail, great food, great entertainment. We are going to accomplish this by focusing on two areas, events and social media and mobile technology.

With respect to events, we will be increasing the number of events in each of our centers, from an average of 10 to 20 in 2011 to 30 to 40 in 2012. The majority of these, unlike previous years, will be generated at the local level. But that being said, they will be continued to be supplemented by GGP Corporate at such events as Shop Til You Rock, Fashion Friday, and Dress for Success. We believe our shoppers will embrace this strategy and make our centers their venue of choice. As mentioned we will be using social media and mobile technology to increase the number of loyalty shoppers. While each of malls has a malls site that interfaces with social platforms, such as Facebook and Twitter, the primary vehicle of focus for us this year will be The Club.

Today The Club has approximately 4 million loyal customers. They visit our centers 13 times more than the average shopper. The spend approximately $1200 more per year than that same average shopper. In November we recently upgraded this app and we created a new and exciting way to interact with our shopper. The introduction of fun, interactive games is one venue we pursued. For example, during the Halloween season, we created a mobile game that attracted approximately 100,000 players, and they played this game over 300,000 times. More importantly, it increased our Club membership by 36,000 new members.

Our new game, Shake to Win, is currently under way and I encourage all of you who have an apple or an Android, to go to your app store and search for GGP The Club and have some fun. As mentioned at the outset of this presentation, we are dedicated to making GGPs leasing organization the gold standard of mall leasing. We have been on this since January but we have just left the port. On this trip I am proud to say I have what I believe to be the most talented and dedicated team in the industry. On behalf of them, I would like to thank you for your time this morning.

And now I would like to turn you over to my colleague and friend, Rich Pesin.

Richard Pesin

Thank you, Alan. Good morning. I am very happy to be here today to discuss our anchor tenants and development initiative. Last January when I arrived at GGP, I found that we had very talented people. Building on that talent, we have spent the year augmenting and reorganizing the teams to arrive, at what I think, is one of the best in the industry. Structurally, development and anchor leasing were in separate departments. This needed to be changed as the two go hand in hand. Streamlining the organization has created a more efficient, collegial atmosphere that allows for better execution of our divisional goals.

The group is now broken up into three divisions. Anchor leasing led by John Bergstrom, is responsible for all departments of department store leasing and maintaining these vital relationships. John has been with GGP for 37 years. He has worked in asset management, inline leasing, development as well as anchor leasing. And has been working with the department stores for 25 years. Big box leasing is run by Chris Pine. Chris handles all deals with large format tenants that are not department store. These big box tenants include the likes of Dick's Sporting Goods, LA Fitness and AMC Theaters. We brought Chris to GGP this year, and during his 20 plus year career he was primarily focused on the strategy, expansion and expansion of national retail chains such as Brinker International and Whole Foods Market. During Chris’s nine years at Whole Foods, he was responsible for the strategy , acquisition, development of over 100 locations in the U.S. and UK. He is truly a leader in the industry.

Our Senior Vice President for development and construction is John Cournoyer. John joined GGP after 15 years at Forest City, where he started as an intern for both me and Sandeep. At Forest City, he was responsible for the day to day development of $1.8 million square foot mixed use project with cost close to $1.1 billion. John has the rare combination of creative design and problem solving skills along with an acumen for numbers and cost control. The talent in this group runs deep. And I am proud to oversee this seasoned team of professionals.

I told you something about our people, now let's look at our anchor tenants. The department stores are thriving and they are still the cornerstone of the mall. For the most part their sales are up and we continue to maintain excellent relationships with them. Let’s look a little bit deeper into the chart and at certain stores. At JCPenney, they set the second half of this year eagerly anticipating the arrival of former Apple retail guru Ron Johnson, as CEO. One of Ron’s first directive was to turn Penney’s real estate focus to new stores at the mall. In the last few years, many of Penney’s stores were placed in off-mall locations. This has ended and will fit well with our mall strategy. Neiman Marcus tells us that luxury is very strong right now. Within the GGP portfolio, Neiman Marcus has double digit gains over the last quarter.

Nordstrom has opened two stores with us this year and they are both doing well. Dillard’s has posted record setting earnings in two of their quarters this year, and is focusing on providing a high quality level of service and merchandize. Two privately held companies not showing on the chart, Lord & Taylor and Von Maur, do not -- since they do not report earnings aren’t shown on the chart, both have solid numbers. Lord and Taylor has reported that they have had record results for the Black Friday weekends, while last month Von Maur has entered the Atlanta market with GGP at our North Point Mall. They are doing extremely well and to date many departments within that store are already number one in the chain. We believe that bodes very well for Lord and Taylor and Von Maur as they seek to enter new markets with GGP.

Lastly Sears. There performance on the chart shows they are not performing well. But recently Sears has begun working with us on sub-leasing less productive portions of their stores. We believe this presents a great opportunity to upgrade the tenant mix and traffic to the Sears wing of the mall. We do not see Sears subleasing activities as competitive to our interest. This is because Sears best opportunities lie in our stronger malls where vacancy is low. An example of this can be found at South Coast Plaza, a non-GGP mall in Costa Mesa, California. Here Forever21 subleased 43,000 square feet from Sears, at a configuration that is primarily basement space with some space at street level. Since Forever21 opened this summer, the mall has benefited from the added draw while Sears have increased their overall sales in the balance of the footprint. We look forward to working with Sears.

The resurgence of the department store has led to three new store openings in our portfolio this year. For 2012 and ’13, we have four additional openings, including a new 120,000 square foot Bloomingdale’s in Glendale, California. In a few minutes I will present the case study on Glendale. On top of these four anticipated openings, we plan on announcing five additional department store openings for 2012 and ’13.

Our big box leasing has been equally robust. Big box is our added traffic drivers to our malls. We want to make the mall the place for one stop shopping. We want to add -- we are adding all types of boxes from grocery stores, sporting goods superstores, health clubs, movie theaters. We want people to focus on the mall and satisfy all their needs and demands. We 2011 we opened 28 big box stores, including Crate & Barrel, Nordstrom Rack, Bed, Bath & Beyond, L.L. Bean and Kohl's. These deals totaled 920,000 square feet with gross revenues of approximately $9 million.

For 2012, we will generate approximately $12 million in gross revenue on 770,000 square feet. These tenants will include Cabela's, Fresh Market and Earth Fare, two supermarket chains, The Sports Authority, DSW and Dick’s Sporting Goods. And while still early in the leasing cycle for 2013, we have already slated over $4 billion in gross revenue on a 180,000 square feet, and we plan to build on this momentum. Since real estate is a hands on business, and as Sandeep and Alan both mentioned, we spend the first of the year visiting our properties and undertook what we later dubbed to be our strategic property review.

From the development side, we looked at the properties assets, liabilities, and looked at places to improve or expand the physical plans, or add new department stores or box tenants. We have focused on each assets historical and projected occupancy, sales and NOI, anchor and small shop merchandize mix, and trade area competitive ranking. The process was very exciting. We saw vast opportunities throughout the portfolio. With a focus on long-term value creation many of our redevelopment opportunities are at top malls like Ala Moana, Fashion Show and Glendale Galleria. We have identified development projects at 73 of our malls, with a total pipeline cost in excess of $1.6 billion. These will produce double-digits unleveraged stabilized returns.

While I cannot emphasize how much untapped value there is at our trophy assets, we are committed to a risk adjusted strategy for 2012 and ’13 with a total cost of about $408 million. This represents $285 million at GGP share in both JVs and wholly owned properties. The 13 properties that are highlighted on this map are the construction starts for 2012. One of the largest of these is the Glendale Galleria in Glendale, California, a suburb of LA. The Glendale Galleria is an iconic 1.4 million square foot, enclosed super-regional mall. It was acquired by GGP in 2002 and is home to the first Apple and Disney stores. In such a highly competitive market, the mall was last renovated in 1997 and it showed.

Nonetheless, the mall still does about $675 a square foot. Mervyns left the mall in 2008, and that wing has struggled since. Last month, we were pleased to announce the 2013 opening of the new 120,000 square feet Bloomingdale’s in the former Mervyns box. As part of bringing Bloomingdale’s to the project, we recommenced an interior and exterior renovation of the entire mall. The most dramatic feature of this renovation, will be an expansion of the mall’s plaza leading to its main entrance on Central Avenue, across from the busiest crosswalk in Glendale. We are investing $115 million into the mall with returns in excess of 10%. We are able to achieve this because 37% of our inline leases expire in 2012 and ’13, giving us the ability to bring in better tenants at higher rates. This includes re-tenanting 100% of the Bloomingdale’s wing of the mall.

This past November, the Glendale City Council approved our project, and we could not be more excited to commence construction in January. As the following slides show, we will be upgrading all portions of the mall. From the new water feature and our entrance on Central Avenue, to every aspect of the interior mall, including a spectacular chandelier. New flooring, new rails, covering up as you see in the mall, some of the bricks that existed, making it more modern, more consumer friendly. Taking us all the way to new Bloomingdale’s, again anchoring the project. We think it looks great and we can't be again more excited.

I want to thank you very much for your time today. I know it’s a little inconvenient to come here and meet us but we wanted to get our message out. We have a great time lined up and our efforts are focused. Building on some of the department store and big box drivers discussed earlier, we have identified an exciting pipeline of opportunities. We are confident that we can deliver accretive returns on a risk adjusted basis and mine long term value within our core assets.

Now please let me introduce, Chuck Lhotka, our Executive Vice President of Asset Management. Thank you.

Chuck Lhotka

Thank you, Rich. Good morning, everyone. I am happy to be here today and to have the opportunity to tell you a little bit about our asset management group. Before I introduce my team, I would like to tell you about how we approach asset management here at GGP. We are focused on the daily management of a 137 high quality shopping centers. We maintain strong relationships with our communities and our tenants. We handle the expense side of our business, for what I believe we do so prudently and efficiently. And our main goal is to provide a great shopping experience for our customer.

Now let me introduce to you my team which I believe is the strongest in the industry. First, my three Senior Vice Presidents of asset management. We are organized on the same regional basis that Alan described in his presentation. We have Cathie Bryant in the East. Cathie has been with GGP for 13 years. We have Paul Chase in the West, Paul has been with GGP for 17 years, and Brian McCarthy in the Central. Brian has been with GGP for 26 years. These three strong leaders manage the great teams at our malls, and as you can see have many years of experience here at GGP.

To support our field teams we also have a national operations group headed up by Josh Burrows. Josh has been with GGP for five years. When he came to us, he was previously the head of construction for Kmart. His team has subject matter experts on roofs, paving, HVAC, electrical and environmental, and they manage our capital on a portfolio basis. Eric Almquist, our VP of Administration, has been with GGP for six years. Eric handles many centralized functions such as budgeting and forecasting and he also manages our corporate security team. Dennis Gavelek, our VP of tenant coordination has been with GGP for 11 years. Dennis and his team manage all of our tenants build outs and their main focus is to get out our tenants open as quickly as possible. And finally, Mike Kolling, at 18 veteran of GGP, heads up our property tax group. Mike and his team monitor our tax expenses, they establish and maintain relationships with taxing authorities and they handle any tax appeals as necessary.

Now let’s talk about how we spend the money with these high quality assets. Our expenses fall into two categories, operating expense and operating capital. First, let’s take a look at operating expenses. If you look at this chart, the purple or bottom portion of the bars represent our operating expenses, and the top blue portion represents our real estate tax expenses. I am going to focus on the operating expenses. While our operating expenses decreased in 2010 from 2009, this was mainly due to cuts that were made in 2009 but had their full effect realized in 2010. These cuts were in CAM and in the field marketing area.

As we are headed into 2011, we begin to add back in the CAM and marketing expenses, which led to a larger than normal increase. In 2012 we are expecting a 3% growth in expenses. CAM related expenses are growing at 1.5% while marketing is increasing 24% which will really help drive traffic and sales. On the operating capital side, we have two categories. Ordinary capital, such as paving, roofing, HVAC, sliding and equipment, and refresh such as remodels and renovation. As you look at this slide, upon emergence in 2010, we returned to a more normal capital spend in the $85 million to $95 million range. And also in 2011 we were able to restart our refresh program with two of our Texas properties, The Parks at Arlington and Hulen Mall.

Now let’s take a look at the Hulen Mall refresh. We were able to complete the renovation in just five months at a cost of $6 million. We replaced the floor, repainted the entire mall, upgraded and added new lighting, remodeled the rest rooms, enhanced the exterior entrances, put in a new energy management system as well as all new mall amenities. While the grand reopening just occurred this past October 18, we are very encouraged by the results thus far. October sales increased 4%, 2012 permanent occupancy is expected to increase 4%, a new restaurant, DJs has just opened. Another restaurant, Abuelo's Mexican Grill, is under construction and will open in Q1 2012. Victoria's Secret, Bath & Body and Express have all just renewed at higher rents, and Francesca's, who had turned down the center previously, has just agreed to a new deal. I was at the center recently and it looks great.

Sustainability. GGP has a strong commitment to sustainability. Contributing to the well being of the communities we serve is important and we recognize and pursue opportunities to improve the efficiency of our property. In 2011, 26 of our malls participated in demand response programs, to coordinate energy consumption to curtail electricity in times of peak demand. In 2012, we will have 39 malls participating. Also 112 properties converted to LED lamps on the retail merchandizing units, and now 55 properties are using LED lights in their holiday décor. Whenever we replace HVAC equipment, we are converting to high-efficiency units, which use approximately 20% less energy. We have installed energy management systems in 98% of our malls. We install white roofs to reflect air-conditioning. We now have 70 hybrid vehicles for use by security. We have recycling programs in place at all of our properties. And in 2012 we will be adding solar panels to the roofs at our four New Jersey properties, Bridgewater, Paramus Park, Willowbrook and Woodbridge. Thanks to a strong program from the State of New Jersey, we will be able to install the systems at the four malls at a net investment of $6 million, aided by $21 million in state grants and utility incentive. These solar panels will provide an estimated 12% of these properties energy needs.

Lastly, I really want to reiterate a few key points. GGP has a highly experienced and tenured team of asset managers. We tend to initiate, strengthen and develop relationships with our tenants to prudently manage operating expenses while certainly not compromising quality, and to lead the real estate industry in operating practices and metrics.

I thank you, and now I would like to introduce our Executive Vice President of Capital Markets.

Hugh Zwieg

Good morning. I would like to thank everybody for coming today and making a trip to Chicago in December. Not always pleasant, but it looks like we got good weather today. I have had an opportunity I think over the last year and a half to meet a number of you in the room face to face, and talk our capital market strategy. So I hope today, after a year and half of talking our book, some of this will be familiar to you. So the year and half of activity should give me a point of reference in terms of -- and give you some depth and context as to our activities.

We made substantial progress during 2011. De-risking and diversifying the capital structure. Given where GGP was one year ago, how we accomplished 2011 activity is as important as the result. I joined GGP in early 2010, and was aware that GGP had a core reputation in the capital markets. We had a lot of work to do with the teams with their view of GGP and to diversify our capital sources. We really needed to change how we conducted ourselves, as well as who was the face for GGP capital transaction.

Over the last year we spent time listening to all of our capital providers. So I have been around the country with many meetings. We call this our listening tour. I appreciate the time you provided us. Your candor and willingness to hear and work on our vision of the future. We want long term durable relationships with our capital. We want our capital providers to have a seat at the table where we provide a dialogue around or capital discipline, our capital allocation, the strategy for our business as well as the strategy for the assets that our capital providers look to finance. I believe now that the results are in for 2011, our actions have matched our words on how we expect to do business.

Capital markets team and financial group would like to acknowledge and thank our capital providers for their efforts and support in exceeding our 2011 plans. We look forward to our shared success in 2012. Your open and fair-minded approach with new GGP has been most gratifying. So as change always opens the opportunity for renewal and growth. And if you look at the capital markets and finance team, virtually every person in the leadership group is new.

Now with regard to new I would point out three of the five though have an institute of history with GGP, and I think having history and knowledge is important as well. All in the team, in terms of putting together the blended team have backgrounds in underwriting, finance, analysis, and what we were looking for when we put this team together, was a team of people that had a good balance between our risk management philosophy and value creation. So I would outline the tasks that leadership team has taken place.

I will start in the left with the capital markets team. That’s the leadership team that I would call the external face for the company. They are involved in capital transaction, the financings and deal day to day with the capital providers and assisting me with relationship management. The far right is debt compliance. That’s after the closing they are very involved with the lender on a day to day basis throughout the life of the loan. Most importantly, they are involved in managing the capital reserves that we have in place on the underlying loan. That’s in excess of $100 million. So that an important asset to mind, get out of the reserves and get invested into the portfolio.

Going to left across lease management, couple of comments on that. $3 billion of revenue, 26,000 leases. That group is primarily responsible for making sure of what Alan and Rich create, getting the portfolio correct and collecting the proper amount of money. Business analysis and enterprise analytics, that’s really a working partnership. And they are really our internal leadership team. It’s really where the disciplines merge, from a standpoint of doing critical analysis on where the business is headed and where it’s been. They are very involved in terms of analytics, in terms of benchmarking, forecasting the corporate finance model, liquidity management, and as well which I am very proud of the team, they are actively involved in producing and creating, we hope better transparency to you in the room in terms of producing and issuing the supplemental.

So any comments you want on that, if you see them during lunch over today, feel free to pass them along, we’re always to improve that product for you. So moving on, I think all the objectives you see on the board here as something you have heard before, so you should have some familiarity here. All of our capital markets philosophy reflects their focus on de-risking the capital structure. We want to always ensure we have diverse capital sources and liquidity at all times. I will talk in a lot more detail on that in a moment. We will continue to finance our assets on a secured long-term, non-recourse basis. We believe that asset level financing combines with a smooth maturity ladder provides risk management benefits, balancing our exposure to the credit markets and asset level risk.

This asset level financing also links the operating and financing disciplines and allows us to more efficiently and finely tune our cost of capital. We will always look for opportunities to simplify the capital structure and maintain flexibility with a extreme focus on reducing recourse and corporate debt. Lastly, we are continuing to be committed to reducing our debt as Sandeep spoke to earlier, with a pathway and a goal to reach an investment grade rating. This is a longer term goal that we are working towards. With built in amortization in excess and programmed into the portfolio at approximately $300 million per year in non-core asset sales. We would expect to continue to make substantial progress on this round.

Few comments on where we see the capital markets over the last year and where they are today. I think the most operative question last fall with our capital markets group was, would there be a large loan market. Now that we sit a year later, I can tell you comfortably that the large loan market is healthy, wide open and capital is readily available. We expect interest rates will continue to remain at historic lows. Don’t rush out of the room, this isn’t a prediction on my part, look at the futures curve. I think we see a fairly flat futures curve, so we feel like there is time to deal with the opportunity and the flexibility we have in the portfolio.

Plenty of money for quality real estate. You will see that in a moment. We have got multiple bids from all capital sources across our stack. During 2011 we expected to continue based on conversations with our capital providers. Underwriting continued to remain disciplined at investment grade leverage levels. High quality assets you can readily get financed in the 9% to 11% debt yield range. What I think the important take home here about underwriting is that, that level of transparency and that discipline has given us a high level of predictability in terms of being able to execute our financing plan within the stack.

In terms of the major players that we are involved with, the CMBS markets. Lot of news on that over the summer. We continue to see the liquidity improving there. And I think part of it, if you look at what's going with CMBS and the numbers rolled, volatility is a little bit of excitement as long as you can actually go through it. What they simply really have seen is a maturation of CMBS 2.0. And really what's the market is trying to find a proper structure to meet the bond buyer appetite. And that was really a clearing process I think that carried over the summer. We have seen significant improvement on this in the fall and think the most recent issuance is you have seen AAA spread coming pretty significantly.

Another thing I think, under our team is that entire activity throughout the year and into the fall, all the major CMBS conduit players were still actively quoting competitive structure. Rates blew out so and in many cases they couldn’t be competitive on a pricing perspective, but they were there every day and every week. Bank appetite remains very very healthy across the entire credit spectrum, high appetite for short-term term loans. Life insurance companies I think are the big headliner. They have been very active during 2011. We expect the same in 2011 and certainly have a high appetite for high quality assets and we expect that to continue.

Moving forward on diversification of our capital sources. This is probably one of the most important de-risking successes I think we have had during 2011, we want to continue to build on in 2012. As we began the year, you look on your left, December 10, that was the mix of our lender group. 59% CMBS, 18% life company and 13% bank. Next column to your right, 2011 GGP lender spit. It was 52% CMBS, 48% life company, that’s about $1 billion swing in one year between life co and CMBS. Further point of reference, the actual refinancing we rolled over was a mix of 78% CMBS, 22% life co. So we sit with a lender mix of about 63%, 24%, 13% today. And from a diversification penetration standpoint, we have not even tapped the bank market yet. So there is a lot of capacity there as well.

On your far right, is 2012 maturity split. So I hope my eyes aren’t too bad to read the far right, I guess it’s 66% and 34%. In the last we have the two columns that are left to 2012 on your far right. It’s our best estimates, we have a total loan production for the three sectors. And I think the take home there is that with what we accomplished in 2011, we don’t additional lending capacity or market penetration to achieve our capital plans. And I think there is a congratulatory to the team. I also think the last headline there demonstrates is the success of our listening tour and again appreciate the efforts our lenders have put forward.

I think how the team conducted itself during the financing process there are changing lines of lenders, and I know for a fact, as I will talk for in a moment, several vendors went from the no category to the maybe category, to the yes category. So let’s talk about the 2011 roster. What's not on the table which I would like to point out I guess first, is our strategy for how we approach 2011. In order of priority, our first focus was, number one, to de-risk. Improve and smooth the maturity ladder out. In combination with that looking for long-term financing, starting to add duration of the portfolio. Secondarily, we wanted to chop away at all the high interest rate debt that was open to prepay.

Thirdly, with proceeds. Proceeds probably got the bigger headliner but proceeds were important from two perspectives and I will talk about one in a moment and one now. A portion of the proceeds one, we want to make sure that on an asset by asset basis. We get the debt right in size with the business plans of each asset. Secondarily, of the excess proceeds I will talk about later, how we apply those. I would like to think a lot of times as we use our proceeds it’s a closed system, that’s how we are going to work the capital stack, and I will talk about that in a second.

Loan count, 20 loans during the year, a lot of wood chopping. Give you a breakdown on that. Eight of the 20 loans we did was life insurance companies during 2011. As a point of reference, three of the loans were with life insurance companies that we refinanced, out of the 20. So we improved by five there. Also we recognized all large life co lenders that quoted on our deals and all assets during the year. And within the eight life co loans that I outlined, two were with brand new lenders. As you can see we are focused on long term debt within maturities in the 8, 10, and 12 year range, and at the bottom of the table we chatted about eight years of duration from what we refinanced to what we put in place.

We refinanced one 2000 call maturity earlier, Park Meadows Mall, with the existing lender. And lastly, it’s not on the table as well, is the property we financed were a mix of primary and secondary markets, as well as sales productivity. So we think at this point we have a good handle on the potential financing within the entire mall portfolio. Little progress on our objectives. Going to the bottom in the orange, $1.7 billion of debt reduction, $475 million of recourse reduction or about $2 billion of de-risking within the portfolio during 2011. Going down the left side in terms of debt reduction, as I talked about earlier, the proceeds side.

The $391 million represents our financing. Now what's not in that number if you read, if you have seen our press release is we actually have financed about $600 million. So I am going to talk about in a moment where that other $200 million went. So bear with me. First we have financed, we reduced the corporate debt by $339 million. $257 million was amortization, that’s through $930, so when we get to the year-end, that total will be closer to about $340 million, as a point of reference. So I just thank Shobi and his team for sale through disposition efforts we de-leveraged $345 million and in the last we have $1.1 billion on the Rouse Spin.

Let's talk about how we improved some of the economics. On the right side we have a total liquidity of $1.4 billion, roughly 50% cash, 50% undrawn revolver. Substantial progress from where we were a year ago. On the interest rate side, we decreased interest rates, 77 basis points and 5.8% to 5.06 and what we have financed during the year. So on a dollar for dollar basis, doing simple math, that’s about $25 million of interest rate savings.

$4.2 billion is our headliner. But most importantly on the top on the interest rate side is the refinanced or repaid open-at-par debt at 6%. One of the great things we have within our flexible capital structure is we can go in and we can fully prepay partially pay any open debt. So as we looked at this proceed strategy, we said okay, let's up finance and let’s go after some of this high rate debt where we want to delver it right size. Some of the stuff that we either we want it with no leverage or bring the leverage down, that we want to partially prepay down all the debt. So we sit today with I think only 2 loans above 6% that we are working on lease financing. But everything else in the stack today was right under 6%. So we have got a pretty attractive interest rate profile created in the last year.

Flexibility is a beautiful thing. We have been talking about this for the last year and it continues to maintain in place. Let me sort of seat you on where the stack is today. At the top $18.9 billion of total debt, that includes our bonds as well as our secured debt, at an average interest rate of 5.25%. Fixed to floating is 88% to 12%, so we are very comfortable there given the environment we are in. So the headliner, GGP has the optionality to prepay 50% of its secured debt stack today, as we said $8.5 billion. I can't tell you how huge this option value is.

Let me give you an example. Our open-at-par debt has maturities from 2014 to 2018 at an average interest rate or 4.75%. So we have got very attractive interest rates in place. Secondarily 85% of that open-at-par debt matures after 2016 and later. So this option window has substantial duration in addition to flexibility. So how are we going to apply that flexibility. Going forward, while we have some room we continue to chip away at interest rate savings. A good portion of that flexibility we wanted to apply directly to asset driven events within the operating side of the portfolio. And this will allows us to match our financing with the property strategies as the property team continues to go NOI.

Couple of quick highlights on that $8.5 billion in take home nuggets there. Of that $8.5 billion we have prepaid, $2.6 billion of that reside within our Vegas malls, and within Ala Moana, Hawaii. So let’s talk about laddering, or Sandeep calls my fixation. Very important part of de-risking and risk management. From the far left of the graph, 2012, the 0.3 in, I guess that’s a shade of blue, that’s $349 million of the first trance maturing of the Rouse bond. Now let me clarify the Rouse bond so you -- because I think we have had confusion with Rouse. Shobi talked earlier about Rouse Properties, Rouse Properties is the spin-off of the 30 mall asset, standalone private company we are creating.

The Rouse bonds are the Rouse company which is the legacy bonds we inherited as part of the Rouse company acquisitions. Hope we have eliminated the confusion. So I am going to talk a little bit about that in a moment. In addition to that in the far right is, in orange, is the refinancing activity we did 2011. Again, those 8, 10 and 12 year maturities. The dollar amounts you see across this graph to eliminate any confusion is actually the maturing loan amounts. So it’s what the amortizing balance to that maturity. So as a point of reference within the stack of what we did in 2011, under 8%, which is our biggest year at $1.4 billion is how we layer it in the stack.

I guess the last take home because I am going to talk about 2012 in a moment, is conspicuous by its absence in 2022, no maturities. A good thing we have got a lot of room to layer and ten year money. Ten year money still today is the most competitive money from a respective borrowing cost basis. Couple of other highlights. Just for those who may not want to turn these supplemental every day. 2017 is our Vegas malls, Fashion Show and Palazzo that rollover at 2018 as Ala Moana. All open at par as I’ve discussed with you as earlier.

So let’s talk about the plans for 2012. $1.5 billion at share, at 5.42% interest rates. So we think we got somewhere in to chip away at that interest rate, not as big as headliners 2011, but we think there is a real opportunity there. Give you a quick breakdown, if you look at the table in the center of the slide. You get 12 properties maturing, a very high quality portfolio. 96% occupancy. Approximately $500 a square foot in mall sales. And lastly and importantly $161 million of NOI, so about an 11% net yield. So ample room to refinance, when we got to refinance in 2012. Again, as I referenced earlier, for this quality of portfolio, 9% to 11% all day long is no-brainer.

A couple of other headlines within that. Mall in Columbia. A $400 million loan. Oakbrook Mall, $94 million loan at share. Both of those malls produce sales in about the $700 square foot range and are within our top tier of malls. Makes up about 33% of the rollover. So from a risk standpoint, very high quality stuff. Lastly, we are going to monitor about $16 billion of that open and prepaid. And again, that will be driven based on market events and asset events and we would look to try to take advantage of that during the year. That comprises another above 10 to 12 deals.

Getting back to the Rouse Company bonds. As I discussed $349 million, we expect with the ample liquidity profile we have that we will retire those at maturity. And one more time, so I get it right. The Rouse Company capital structure, the Rouse Company bonds. This $5.2 billion of debt that encumbers The Rouse Company structure. Again, on the table on your left, very high quality portfolio. $500 a square foot in sales. I guess the take home I just want to leave with everybody here is really the bar chart on the right. That in 11% debt yield, with the trailing 12-month NOI I showed you there, we can take up the whole stack very readily. In addition to that, what's not on the chart, 50% of this secured debt are the $3.5 billion is open at par right now. So that’s gives us a lot of flexibility there.

So to wrap it. We have made continued marked progress in diversifying and de-risking the capital stack. We will continue to focus and work on broadening our lender sources. We have enjoyed that and it’s a challenge and I expect we will make good progress next year, just based on preliminary conversations with some of our lenders. We will continue to look at laddering including maturities and we have an absolute commitment of reducing debt as Sandeep talked about. Flexibility in the debt structure will continue to allow us to opportunistically finance. Again you are probably going to see more of it in sync with asset plans then just absolute financing given the rates and the term we have on there. And lastly, we will continue to focus on matching investment grade debt with long term NOI generation. Thank you very much.

I would like to introduce Steve Douglas.

Steve Douglas

Good morning, everybody. I have been tasked with walking you through the section that is now the foregone conclusions since you all have jumped ahead I am sure. Given I have seen the couple of notes already, so I will go through the motions and hopefully give you some color on this. Thank you all for coming. It’s a pleasure to see you all. I want to first of all thank Sandeep for his kind words at the outset. Although I can assure him that -- and he knows this -- as I go back to the top I have a keen interest in the success and continued success of GGP. So as I was telling people earlier it just gives me the right, now I don’t have to worry about those nasty social issues. I can just be shareholder.

Secondarily, I thank everyone of you in the room. It’s been a great year and -- or year and half. And I appreciate the feedback whether positive or negative but I am sure in the future we will be continue cross paths. Finally, I want to thank the finance team that I have working with me led by, with Hugh and others in the room. It’s a great squad, it’s done great things year and I think we will continue to see some great thing going forward. That’s it.

In addition to the team that Hugh described, I want to give some commentary and some accolades to the team I have underneath me as well. First of all, Jim Thurston is a fellow who recently joined us from Simon Properties is the Chief Accounting Officer. He has big shoes to fill for those of you who remember Ed Hoyt. He was a -- the guy had a tremendous amount of time for and respect for. And I think, Jim, and as he continues to get his legs under him and work through the organization I think he will have a great future in that side of the house.

Kate Courtis is responsible for all of our tax. Having never been the CFO of a REIT before, Kate was a very valuable person for me. Someone I had to slow down on occasion, but she is seasoned veteran and has done great work for us on all the restructuring to the process of emergence as well as now with Rouse Properties. And finally, Kevin Berry, who has recently joined us as the Head of IR, again a long time industry professional. I think someone you should reach out to and get to know on a regular basis. And as Sandeep pointed out, with a renewed focus on communication and having people understand the story, I think Kevin is going to be big part of that.

That said, going back over the, just to anchor everybody on our numbers, over $3.2 billion of annual revenues. $2.2 billion of core NOI. As Hugh pointed out, $1.4 billion of liquidity, roughly split half and half between undrawn lines we encash in the bank. Obviously, we are one of the top three REITs in the nation with $34 billion of total market cap and more than sufficient liquidity to keep the traders happy. Looking back on September, we have delivered $2.4 billion of revenues, $1.6 billion of core NOI. I think most importantly, however, if you look through that number our core NOI on our mall portfolio has grown about 2.1% over the last year.

Core FFO, I know it’s in some -- that we have discussed at length and as I look at Alex, I know I have had numerous conversations with him on this topic. And I just want to have people understand the context so as to why we continue to do this. One of the challenges as we emerged was to make sure that people could get a feel for what the actual malls were delivering as opposed to the associated and I call it noise here, of emergence and obviously the situation GGP found itself in. We stick with the NAREIT definition but from there we exclude the warrant adjustments. So those of you unfamiliar with the warrants, the warrants were issued as part and parcel for the emergence transaction and part as a incentive to the sponsoring shareholders. But they injected extreme volatility in the numbers because they were treated as liability for a vague and in my view inane accounting reason but nonetheless they are treated as liabilities subject to mark-to-market, as such they inject tremendous volatility as you would have seen in the last quarter, you’ll see in a second.

We also try to eliminate the noise from bankruptcy. That is default interest, bankruptcy related claims, advisor fees and the like, none of which have any bearing on the future of the -- or the operating results of the mall. So it’s important for us to eliminate those. The emergence you may recall, we did mark-to-market the balance sheet which drove tremendous adjustments and swings in straight line rent over market rent, under market ground leases and the like, which again makes the number on a year-over-year basis incomparable. And finally it excludes non-recurring items that relate specific to GGP and the situation we find ourselves in. Things like cost associated with the Rouse spin, redundancies associated with our continued restructuring in the operating portfolio.

We endeavor to continue to give you the tools to make the assessments you need. We don’t at least -- and if we do if we (tell us) but we don’t (know obviously) what those adjustments are and we go to great lengths in the supplementals to allow you to make what adjustments you feel appropriate. In the future, as we get further away from the event that caused this noise, I think we will naturally veer back to a industry standard definition as these things are washed out of the numbers. But, unfortunately, at least for the next year and a half or so as you have the comparative, I think it’s incumbent upon us to give the picture in terms of the actual operating statistic.

Just to reset the guidance. We did announce in our third quarter conference call, FFO guidance of $0.93 to $0.95 a share. And you can see in this line on the warrant adjustment, you can see again the volatility associated with those numbers and why we feel it’s important to isolate those kinds of things. 2012 guidance, it was kept secret in the room. We are giving guidance on a core FFO basis inclusive of Rouse, and I will just comment to that in a second. The $0.93 or $0.95 next year $0.99 to a $1.03. The $0.09 a share is the estimation, it’s not a guidance number on behalf of Rouse, that’s going to be incumbent upon them to give. It’s in fact a factual number for the balance -- for what we see this year. So contribution to GGP on a GGP share basis or roughly $0.09. So all we have done is hold back static next year so that you can have it in terms of a comparable number. But I think the important number, assuming Rouse gets done, is $0.84 to $0.86 this year and $0.90 to $0.94 next year, and I will give you some color on how we drive those numbers in a second.

The key drivers there. Physical occupancy has increased and you would have heard in Alan’s presentation and Sandeep’s commentary that focus on driving occupancy increases. We are going to roughly 92%. Permanent occupancy is going to climb from 83.5% to 87%. Temp occupancy will decline roughly 200 basis points to 5%. Increase in the year-end percentage leased will go up 100 basis points to 94% to 95%, and we surmise roughly equivalent termination income on a year-over-year basis. We have seen a decline in that over the last couple of years and I think it’s more indicative of being able to take a different approach to the portfolio. But we have assumed a roughly unchanged amount in how we go.

The increases in core NOI, we are going to start with the property revenue number and a lot of the drivers, I know they are not the numbers but the drivers will definitely be familiar to you. Contractual lease increases, which is those bumps associated with CAM and in-place rent will grow roughly $70 million on a year-over-year basis. Lease-up including that temp to perm conversion will contribute roughly a $65 million increase in revenues. Obviously, as we reduce the reliance on temporary tenants we are going to see a decline in that percent in lieu in those numbers which will decline some $20 million.

What Sandeep and Alan alluded to, the implications of the, sort of last year from a leasing perspective. And as we continue to wash through that 2010 leasing, we are going to see a decline of roughly $50 million, but on the upside the leasing that had been undertaken since then is really starting to take hold and I will go back to Alan’s chart on the life cycle of those leases, it does take some time to get them installed and see the implication of that. So we are seeing roughly $20 million in addition contribution on the year-over-year basis there. And other, and obviously in portfolio of this size we see a declines in or a conservatism in other revenue amounts, so we are roughly estimating $10 million swing there for $75 million.

Flowing that $75 million number forward, we anticipate in total operating cost increases of roughly $25 million. Split out as you see here, for the net increase in core NOI of some $50 million on a year-over-year basis. Rolling that forward, that $50 million creates the increase in core NOI of $50 million. The decrease in interest expense, again full marks to the capital markets team in terms of what we have been able to achieve this year and full marks I guess to the -- in the better lucky than good category, we certainly didn’t anticipate interest rates to be where they are at today. But we were able to take advantage of much of the important part. So we are actually seeing a decline of some $35 million in interest expense and remember that is also, given what Hugh showed you in terms of the expansion of the term of debt in over the next ten years will continue to provide an enormous benefit to us. For a increase in core FFO of roughly $80 million, we strike that increase we talked about.

So with that I will turn it back to Sandeep and then we will field some questions.

Sandeep Mathrani

Thanks, Steve. I hope we have been able to introduce our team of talented individuals. As I like to say, the proverbial ship has started to turn. As someone said to me the other day that it takes, I forget, 15 hours to move a battleship 15 miles. So hopefully, it hasn’t taken us that long and we started to accomplish the results a little earlier. Obviously, we are very very focused on increasing occupancy, increasing occupancy cost, driving down our temp to perm conversions. So we are very very focused on that. Mining our existing portfolio. Not only have we identified the $1.6 billion, we are implanting over $400 million of that, ($2.85) at share, starting next year.

Once again focused on continuing to de-risk our balance sheet. We have that 20, 22 with no maturities and we have been very disciplined, I might add, which Hugh didn’t mention, but very very disciplined. Not only were we forced to go through an amortization schedule as we emerged, we have continued to do loans with an amortization schedule. Because we do appreciate, where we sit on a debt to EBITDA basis and we want to continue paying that down. So our new loans are also focused, very focused with amortization.

Again, the focus this year 2012, on deleveraging our balance sheet. And that sort of start off with the paying off the Rouse bonds and of course further sales of non-core assets. Continue selling non-core assets. You know I like to say at the end of this whole trip, okay, we will be -- I like to say (inaudible) because of the quality of assets, they are quite fantastic. Today those assets, on an asset by asset basis sell somewhere in the five. We have got a projected NOI of $2.14 billion in 2012. In 2013 we won't have that $50 million drag. The occupancy numbers you saw for 2012 are year-end so the full impact will be seen 2013. I am sure you guys are better at math then I am.

We are going to continue to identify accretive acquisitions. Again, only if they, for the most part are cash neutral. We are holding our cash, as you know, for debt repayment. We are going to continue to try to buy more anchor stores like we did at the Neiman Marcus which is a front entrance to our number two mall in the country, Fashion Show. We believe we have accomplished our goals for 2011. We are well on our way in 2012. The beauty of us sitting here and being able to give guidance is that 80% of the leasing for 2012 is already accomplished, so it’s pretty baked. But we can do better, I am sure, as we get into expenses and controlling more of our expenses. And we have given you what we think is a pretty conservative guidance.

We have our sites now on 2013. As the leasing folks pointed out we have started some of the momentum. So I thank you all for, I guess about sitting quiet for an hour and forty minutes. And all my colleagues have been on iPhones and looking at results, I started to stay very focused so I could focus on the next part of the presentation which is I will open it up for Q&A. And we have roaming mic so if people have questions please do feel free to ask them. Mike will always have to be first why I don’t know. Stewart second, Steve second.

Question-and-Answer Session

Unidentified Speaker

Sandeep, you talked a little bit about deleveraging, the balance sheet as a goal for next year and over the long term. May be you can just put the metric in numbers to that in terms of how you are going to accomplish that goals? Where you want to get to from a leverage perspective? And you talked a lot about, there is a lot of capital spend going on. Whether it’s the redevelopment, the development, the assets in Aliansce. So there is a lot of money going out and so I am just curious how you envision taking it down and where you want to get to? And the second part of it is, I think there was a slide there that said you wanted to get investment grade rated. And so, with a secured balance sheet strategy I don’t know how you are going to accomplish that goal, and also that would be a very aggressive debt to EBITDA of the deleveraging. So can you just marry those up?

Sandeep Mathrani

Okay. So I will answer the -- I almost feel like answering the second question first, but I will have to do the first question. As we went out last year into our road show, we said that it would take -- we would get to an accretive five year period at 7.5 to 8 times debt-to-EBITDA ratio. And we would accomplish that in multiple ways. One was with the continued amortization. I think Hugh indicated this year’s amortization is about $340 million. We are going to continue amortizing ourselves, for 2012, 2013, 2014. Two, we do have liquidity on our balance sheet today to start to chip away at the Rouse bonds, which we intend to do.

So if we accomplish both of those next year that will be $700 million. It is a process Michael, it’s not going to happen overnight. Okay. Increase in NOI, reduction in debt will take three to five years to achieve what we feel will be comfortable which is 7.5 to 8 times. I think as Hugh indicated, our goal is to get to investment grade, it is much longer term goal. So we have that in our view. I think time will tell how we get that but we are focused right now for 2012, 2013, 2014 on deleveraging our balance sheet so we can to the 7.5 to 8 times debt-to-EBITDA ratio.

Unidentified Speaker

Just following up, I mean just more specifically. Your percent NOI that’s encumbered right now. What is that number?

Sandeep Mathrani

You mean our assets. All assets are encumbered.

Unidentified Speaker

So it’s a 100% of your NOIs now encumbered?

Sandeep Mathrani

100% of our assets are encumbered. Obviously we have free cash flow.

Unidentified Speaker

Right. So I mean just in getting addition to Michael’s point that the math just seems very difficult, especially if you want to grow. So it just seems that you know as you think about -- as we think about GGP over the next three or five years, I mean you can go back to McGuire. McGuire talked for years about deleveraging. They never did because the numbers just didn’t work. How can we have confidence that you guys will actually delever and you are willing to take that earnings dilution?

Sandeep Mathrani

So Alex, as we have seen -- we have shown, we have been focused on selling non-core assets, and they are dilutive. What's been important, it creates -- it does two things, one it pays down debt and gives us free cash flow to pay down further debt. Two, NOIs continues to grow. Three, we are going to continue with the amortization schedule. So as a matter of fact if you simplistically took and did a ten year cash flow, not to say that we are not going to be more aggressive in that. And you basically look to the amortization schedule and the growth schedule three to five year period, the difference with someone else may have been the amortization schedule. We are aggressively amortizing $350 million we have said. So I think we actually got it.

Unidentified Speaker

But you also have $20 billion of debt?

Sandeep Mathrani

$18 billion. After that...

Unidentified Speaker

Okay. All right.

Sandeep Mathrani

Every billion counts.

Unidentified Speaker

Okay. And then this is just a probably a Steve Douglas question. Just in your reconciliation, your actual FFO guidance for next year is $0.85 to $0.90. The $0.05 adjustments that gets you to core FFO, what's in that $0.05? Page 93.

Sandeep Mathrani

Can we come back and answer that question?

Steve Douglas

Yeah, I am going to do a little bit of research on that one now.

Sandeep Mathrani


Unidentified Speaker

Sandeep, can you talk a little bit about the cost savings that the company might incur as you spin out Rouse Properties and I am not sure if that’s factored into the numbers that you have given us today. I didn’t see anything about personal reduction or headcount reduction or cost savings this company might have?

Sandeep Mathrani

I think, there was on one of the slide actually, Steve. It’s not the book, but it was on one of the slides., that there is of course a $30 million of G&A savings. We haven’t worked through all the other expense savings that we may anticipate as a result of the Rouse, but we do anticipate that $30 million going up. Will it go up by more than $10 million or so, I don’t anticipate that. I actually see that $30 million going to (inaudible). And that’s already in the numbers side. The $30 million is in the numbers.

Unidentified Speaker

Can you talk about asset sales, outside of the Rouse spin and is anything embedded in guidance?

Sandeep Mathrani

No, you know, guidance is comparability. Right. So when we do sell, you have discontinued operations. So in our guidance numbers there has been no asset sales taken into account. So we are aggressively going to continue to sell non-core assets in 2012 so they will be at adjustment. So that will be one of discontinued operations.

Unidentified Speaker

What is the size of the pool of the properties that could still be sold overtime over the next few years.

Sandeep Mathrani

Can you repeat the question please?

Unidentified Speaker

Yeah, the size of pool of assets remaining that you will contemplate selling post-Rouse spin over the next few years?

Sandeep Mathrani

So, as Shobi indicated, and if you saw in the chart, we sold about 2 million square feet of strips and offices here. We are still left with about 5 million square feet. So as the office market does recover, because a large percentage of that is in Vegas and Columbia, Maryland, we will continue to sell that. And I think it’s about $1 billion or so that we could sell. But I might add, beyond the strip and the office portfolio we will look to selectively sell some of the malls that remain in GGP of the 1.7.

Unidentified Speaker

Could you talk about leasing for a minute? How much of the few hundred basis points of improvement from temp leasing to permanent leasing is already done. And how do the lease rents compare for those leases versus their normal portfolio?

Sandeep Mathrani

Well, you know again, I didn’t go to breakdown how much of that is done, because when we look at it, what is our total goal for next year. And of that total goal, of the expiry leases we have accomplished 80%. Of the total goal we have accomplished 60%, because we hope to get an additional, a 100 basis points or so of occupancy. What we do know, on the temp leasing the rents are about $17 a square foot, Alan? About $17 a square foot and simplisticly, if they are re-doing new leases in the high 50s to low 60s, it’s quite substantial.

Unidentified Speaker

I just wanted to reconcile some of the numbers in the presentation. On page 84, the 2010 lease approvals, the impact on the rental rate spread in 2012, it’s a negative $50 million. But then if I look back to page 28, it says that for the 2012 commencement, the leases that, both new and renewals, done prior to January 1, the leasing spread is 2.2%. Can you just reconcile those numbers?

Sandeep Mathrani

Steve, do you want to reconcile or shall we call you back?

Steve Douglas

You need to be careful of, it is page 28. It is a suite to suite basis.

Sandeep Mathrani


Steve Douglas

The other one, obviously is driven by the total numbers. So to the extent what you are looking near is a snapshot of leases that can be directly compared to the size of the individual spaces. To the extent you move a tenant around we configure space and we then have a difficulty in making an absolute comparison. So I think from a leasing percentage this is a set of numbers that is comparable but it’s not the entire universe of leases. Secondly, you also have to look at the fact that there is a spillover effect from last year. In 2011, leases that came in that were done in 2010. We then have to take to the client associated with that lease spread for the balance of 2012 versus a portion in 2011, and then look at again, the fact that you are looking at a much broader universe of leases versus the suite to suite comparison. So those pages are not directly comparable.

Unidentified Speaker

I just had a question for Alan. You know if you step back, Sandeep, you have changed your entire senior management team, it’s all new to GGP. And just from Alan’s perspective from a leasing organization, what was wrong? I mean what have you changed, as you went to all these malls and you have all these new leasing plans, I mean how much has changed within the leasing organization of GGP to drive results further going forward?

Sandeep Mathrani

Alan, even if I wanted to answer the question I couldn’t, he directed it directly at you.

Alan Barocas

A couple of things. Number one, in my presentation I referred to the fact that we now have a (center by center) strategic leasing plan. So we do have a road map. We have been emphasizing. In the past we were strictly financial. What we emphasize now is we emphasize the merchandizing plan to do what's right for the center. We take a look at -- and instead of begin defensive on opportunities we take a more offensive look at leasing. We are looking at taking backspace earlier, if need be, in order combine space and re-lease it to more productive tenants. We are concentrating on two or three or four key retailers by center in order to be able to move the dial and create sort of a rainbow effect for other tenants to come in. So those are two or three specific areas. But overall it really is more of the culture. We are empowering our leasing reps to take ownership of this center. We are now -- instead of a very individual incentive program that was here when we got here, it is now based on the success of the company. So now we are -- its just as important in the past. I guess this a way to explain it to you. Prior to coming in, if you had 4000 square foot space in the East Ridge, Wyoming, okay, and 4000 square feet in Oakbrook, we concentrated a lot on the 4000 square foot space in Oakbrook. Because for a lot of reasons it was beneficial for the leasing rep to concentrate on that floor for obvious incentive there. We have done away with that. Now, it’s all about occupancy, it’s about revenue generation, productivity for the entire group. So today that 4000 square foot space in East Ridge equally is important to the 4000 square foot space in Oakbrook. So therefore we are able to get more of a lift, being creative, take more of a proactive approach in getting space that backs earlier so that we can make things happen quicker. These are just couple of the ways we have been doing it.

Unidentified Speaker

And do you think on that point, you think about the Rouse Properties assets, not the Rouse Company assets, that maybe that those incentives negatively affected those assets so that as you are changing this organization, you know in effect that a leasing agent can focus on the asset in Omaha, Nebraska, versus here at Water Tower. That you would have gotten the benefit if you would have held on to those assets. And how is that organization going to be successful on its own?

Alan Barocas

I think the way they are going to be successful is proving more focus to those centers. All right. What we found in or visits throughout the portfolio was whether -- you know $275-$300 square foot center, when you are sitting in Chicago, may not look very attractive. But when you basically go out there and you walk the center and you see what it looks like, you see the tenants and how they are doing? And you would say that the $275 to $300 is more reflective with the market can bear than whether it’s a poor performance center inside. That’s not the case. They are A center in the marketplace. What we found in our own portfolio by taking -- and we still have $300 square foot centers in our portfolio, by taking and assigning the center to an individual who now is empowered to take that center on as his or her own, we have been able to do amazing things, just by providing focus. So I think whether it’s the Rouse portfolio, whether it’s our portfolio, the fact that we are able to collectively to focus in on the center and do what's right, is starting to reap some benefits. Did I answer your question? Okay.

Unidentified Speaker

Just in terms of all the staff turnover. I am just curious, has there been any examples with retailers where relationships have been damaged because of some of the staff turnover, and if so, what are doing to remedy that?

Alan Barocas

You know, once again, I spent -- I tried it in my very awkward opening line. But I was on the retail side for 25 years. Many of the individuals who head up leasing departments right now, were people that I came up with ranks with. They’re personal friends. So I think almost to a retailer, when we sit down and we meet them, they know that right where we are different, I do have a sensitivity as to what their issues are. The good news for us is that when I was at The Gap, we invented a lot of the positions that they are taking today. So I know why and I know how to address and I know how to turn the table. So that it becomes more of a bit of it us. So to say that it’s been a challenge, it really hasn’t. Because of whether, you know whether it’s my experience, whether it’s the great experience in my leasing team, we have been able to overcome that. In fact, ask around to some of the retailers. In the last 11 months, we are doing more business with some retails then we have ever done before. And with some very very successful retailers where the dialogue had basically just stopped. Okay. But because we find new and different ways to get over the hurdles that exist out there. Increasing speed to market both for the retailer and to ourselves. We just have been doing a lot of plus business and we really haven’t seen that negative side to it.

Unidentified Speaker

And then just one for Sandeep. I think Shobi, commented that there was potential to joint venture some of your existing assets. Can you just talk a little bit about what the size of that might be, if you go ahead and what quality of assets you might joint venture?

Sandeep Mathrani

Shobi, you want to answer that question?

Shobi Khan

With respect to the quality of the assets, I think there has been expression of interest in, of the 137 obviously, I think over half in terms of percentage of malls there’s interest. The A and B class, I mean, obviously, GGP portfolio is now, it’s average is $500 per square foot sales. So they are all, I think, of institutional quality in nature. Obviously, there are not many malls being created right now. So the institutional capital first flowing in A mall with us as being an operator is tremendous. I think in terms of how we balance that, I think we are going to balance that between booking at our non-core asset sales, and I want to stress something that Sandeep mentioned earlier. It’s not just recycling our office and strip portfolios. We will do that as the asset gets (inaudible) and stabilize. But we are going to continue to look at our mall portfolio and potentially monetize those assets that we think have gotten flat growth and we think we can -- we need to put that capital back into our existing assets. So I think we will look at a combination of selling our non-core malls in terms of raising capital, as well as our joint ventures. The joint venture capital is tremendous. There is just a thirst for owning our quality of -- kind of portfolio across the spectrum, whether they be from the U.S. domestics to the foreign institutions, to private individuals to sovereign wealth. Having a Class A mall right now, you can potentially command your own cap rate and we have gotten, attractive offers and we will look at our capital planning to start how we want to redeploy the capital. And just a point of reference, in a couple of malls, recently sold A malls at sub-five cap. And it truly, I think will be a source of capital for us to joint venture some of our better assets which we will do in 2012. It is a goal to bring joint venture partners in, it seems to be the best source of capital for us. And those kind of cap rates, when you think about it, you could get into the cores for institutional capital for core plus assets, which we have a slew of.

Unidentified Speaker

A number of your brethren have gone into the outlet business. Have you -- can you just tell us, how you size up that business and I know you have got your platform but, longer term view of that business? Are there any malls that you have right now that could be converted to outlets? It’s a fairly hot topic and I would love to hear what you have to say?

Sandeep Mathrani

I will say it in a few ways. One, we don’t intend in the near term, in the near term meaning three to five years, to venture into a new business. We think we have enough to mind in our existing portfolio. Does that mean that we won't identify a mall or two within our portfolio to joint venture with a seasoned operator to convert? It may be but it’s more for utilization of the real estate. The outlet business I think is a fantastic business. It’s a growing business that’s proven by the two key players which are Tanger and Chelsea, or Simon's Chelsea. It is a fantastic business. I think it’s a different business. I think we have all seen today that outlet centers can exist closer to the malls, actually in Oklahoma City recently an outlet opened very successfully, 100% lease. We happened to have a mall. And both the outlet is doing well, mall sales have actually gone up. So it’s actually beginning a person to drive traffic to the area. So we actually think they can co-exist. Outlets are very few in the country, so they have plenty of penetration. It’s not our intent to get into the outlet business, we think it is a fantastic business.

Unidentified Speaker

You guys, Sandeep have done a great job of telling us about your senior management team. Are you four all the way down as well, all the way down the ladder?

Sandeep Mathrani

It’s actually a very good point. We have actually gotten established team of professionals from the bottom up. So as a matter of fact when you heard the various -- and may colleagues talk about, the senior management talk about their team, I don’t know whether you have focused on the fact that each one of the people that reports to them has been a long tenured GGP employee. Okay. So we are very excited about the team that we have in place today. Yes, we believe that we are actually done with the process of organization. And when you see people come and go, that will be the normal course of business. But, yes, we do believe we are actually... yeah.

Unidentified Speaker

So, all the way down to the mall level.....

Sandeep Mathrani

All the way down to the mall level.

Unidentified Speaker

The marketing managers, etcetera, that’s taken care off.

Sandeep Mathrani

Absolutely. Asset manager, leasing agents at the mall, Vice Presidents, the team is in place.

Unidentified Speaker

Can you talk about your estimate for $185 million of leasing cost in 2012, I am just looking at page 91. It seems high, I think you spend about $82 million so far in 2011. Can you just comment on why it jumped so much next year?

Sandeep Mathrani

It’s a function of leasing. Right. So if you actually look at the amount of leasing we are accomplishing next year, and it’s beyond the 5.2 million square feet renewals. You are leasing up another, call it about 1 million square feet. The 6 million square feet, about 3 million square feet, if you looked at Alan’s chart was new tenants, it was about 50%. So it’s clearly a function of how much leasing you are doing. So if I base it upon 3 million square feet you would actually say it’s not that high, about 50,000 to 60,000 square foot.

Unidentified Speaker

(Question Inaudible)

Sandeep Mathrani

Correct. And once you start getting to stabilization, which we actually get to by 2013 or near there. You get the 95% occupancy and I think you are at 4% or so temp leasing, the temp leasing can go down to about 3% which is what I maintain is stabilization, you should get back there. And I should think it’s a very good thing because as a matter of fact, you are getting an accretive return on your capital investment. It’s the best money to spend. And it is part of our -- in our liquidity, to (inaudible) that on my mind.

Sandeep Mathrani

Okay. With that I am going to conclude -- I am sorry, Alex has got one last question.

Unidentified Speaker

Sorry. And then including, if you are able to get this $0.05 reconciliation.

Sandeep Mathrani

And if he isn’t right now, he will get back to you.

Unidentified Speaker

Okay. Just as far as the Rouse dividend, can you just sort of give us a size, for as we, what you expect on a per share amount that dividend to be? And then as we think about 2012 taxable income, the dividend, how much of the Rouse dividend relates to just to satisfying taxable gains from this year versus a run rate taxable income for next year?

Sandeep Mathrani

I think Steve can answer both your $0.05 question as well as this one.

Steve Douglas

I will answer the -- your question on the $0.05, if you look at the reconciliation, up above there’s two numbers 65 and 19. And in fact, unfortunately there, I believe the footnote is inverted because it says it relates to loan adjustments. The $0.05 is actually and the 65 and the 19 translated into a per share number. And that relates to things like, over market rent begin amortized, under market ground leases begin amortized and leasing adjustments begin amortized. And the footnote should read -- the adjustments are consistent with those with what you find in the supplemental on our page six, where it shows you which pieces get added back for the purpose of this core FFO. So we did note the number, it was simply buried in the appendix and we all know appendices get the least amount of attention until Alex finds it. Anyway, as it relates to your other question asked, when we look at our liquidity we look at two things. We look at the run rate dividend which is the function of the taxable income we see on an operating basis coming from the portfolio, which is what you saw in terms of our estimation of dividend this year of roughly $0.40 was meant to cover it. Plus or minus at the end of the year, subject to Kate confirming that it actually worked. The amount of the Rouse dividend actually has a nice correlation to the kinds of gains we have incurred this year, associated with things like the special consideration properties, which through the bankruptcy were contemplated as being given back to lenders rather. That creates a net debt, a phantom gain from a debt perspective, that we would otherwise have to payout. In addition a lot of the asset sales that we generated we actually took cash in that in the absence of the Rouse dividends we would then have to pay it out because we have incurred a gain on the asset. But what the Rouse dividend coincidently does is allow us to pay a taxable dividend and retain that cash to either pay down debt or redeploying to the organization. So they are two different animals. One is the recurring dividend which we never touch. And the Rouse dividend does have that nice adjunct of being able to take care of that phantom and asset sale obligation that we would have otherwise incurred.

Well, that’s a -- again without getting too complicated, if you looked at it, we have talked about before in the range of $0.75 dividend. If you look at that on the basis of 985 million shares, that’s roughly $700 million equity base at roughly at 8.5 cap rate I believe. But, not to get too deep into the gore, because we do risk a very long and boring discussion around the tax attributes of the Rouse spin. But to the extant, the basis that sits with in GGP is roughly $400 million on a Rouse assets, plus or minus. The balance, funneling up and when you distribute it out, that creates a gain, which then you have to distribute but because you're distributing it out, the gain becomes irrelevant and you just to get to use the basis to absorb other gains. It’s as simple and as complicated as I can say it. So really at the end of the day, you are sort of mixing apples and oranges. The notional value of the Rouse company has really nothing to do with the tax attributes of GGP and you shouldn’t really focus on the two. But ultimately the value of Rouse, we think is somewhere in the $0.75 to $0.85 range, depending on what cap rate you apply to that company.

Sandeep Mathrani

Okay. So with that we will conclude the webcast and the investor day.

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